Admittedly I have missed a couple of lectures on this which might explain the gaps in my knowledge. But any assistance on these questions would be much appreciated, as I really don't know what to do!
a) Let pt = (pt1, ..... , ptn) denote the price system (i.e. the prices of goods 1 to n) at date t, with t varying
from 0 to any arbitrary date T .
Let x = (x1, x2, ..... , xn) be a commodity bundle. What is the value of x at date 0? At date t? What is the level of “inﬂation” between time 0 and time t for that commodity bundle x?
b) Deﬁne the price index associated with the commodity bundle x? Is such a price index independent of the commodity bundle x? What solution would you propose to obtain a reasonnably accurate measure of "inﬂation?"
Thanks in advance!
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Economics 1st year - help? watch
- Thread Starter
- 29-11-2011 13:45