The Consumer Price Index is reported monthly by the U.S....

The Consumer Price Index is reported monthly by the U.S. Bureau of Labor Statistics, It reports the change in prices for a market basket of goods from one period to another. The index for 2010 was 213.967. By 2017, it increased to 239.051. What was the geometric mean annual increase for the period? (Round your answer to 2 decimal places.)

Transcript

00:01 Once again, welcome to a new problem.

00:03 This time we're dealing with descriptive statistics.

00:08 We're dealing with descriptive statistics, and we have the arithmetic mean, which sometimes we call the average, and x bar represents the sample mean.

00:23 So x bar represents the sample mean, where sum of x stands for the summation.

00:30 So sum of x stands for the summation.

00:33 So when you're dealing with arithmetic mean, it's a straightforward summation of all the values of x divided by the sample size.

00:45 But in macroeconomics, we have cpi, which stands for the consumer prize index.

00:56 So this stands for the consumer prize index.

00:59 And we want to estimate the variations in prices over time and so we're going to use what we call the geometric mean.

01:10 The consumer price index is telling us a typical prizes or price changes for basket of goods and services.

01:18 So we're going to take the square root, not the square root, but the nth root, where n stands for the number of goods.

01:29 Periods.

01:30 So n stands for the number of periods.

01:33 So that's going to be the difference between the current year period and the base year period.

01:38 We're doing the consumer price index for the two minus one.

01:43 So we're given a problem and in this particular problem, cpi reported by the bureau of statistics.

01:51 So we have changing prices between 2010 and 2017.

01:59 So these are the numbers we have...

Question

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