00:01
Here we're discussing measures of the price level, and there's three of them, at least three major measures of the price level.
00:06
The first one being the gdp deflator.
00:08
This is also the broadest measure of the price level.
00:12
And what the gdp deflator does is it roughly takes an average of all the final goods sold, and that gives us an idea of what these prevailing goods are within the market and what their price is.
00:26
Now, the second measurement of price level is the consumer price index, otherwise known as the cpi.
00:32
Now, the cpi, essentially, it's similar to the gdp deflator, although it takes this average price of a basket of goods.
00:42
And this basket of goods is determined based upon the typical urban family of four is kind of a good way of putting it.
00:51
So it's this average price of a basket of goods.
00:54
And what the cpi works to do is to compare today's prices to say yesteryear's prices, right? so you can calculate it by taking the expenditures of the current year, of this basket of goods, right, divided by the expenditures of, say, the base year, whichever base year we're using, and then you multiply it by 100.
01:21
And what this does is it gives us a relative idea of what today's price level is as compared to whatever this base year was...