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    Syncora Rin Ri
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    CPI does not fully reflect changes in spending patterns or standard of living for several reasons: [1] It uses a fixed basket of goods that does not account for new products that provide more value. [2] It cannot fully measure improvements in quality. [3] It does not accurately capture price differences between locations. While CPI is useful for measuring inflation and adjusting dollar values, an alternative indicator like Gross National Income Per Capita may better measure standard of living.

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    CPI

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    CPI does not fully reflect changes in spending patterns or standard of living for several reasons: [1] It uses a fixed basket of goods that does not account for new products that provide more value. [2] It cannot fully measure improvements in quality. [3] It does not accurately capture price differences between locations. While CPI is useful for measuring inflation and adjusting dollar values, an alternative indicator like Gross National Income Per Capita may better measure standard of living.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    21 views21 pages

    Consumer Price Index

    Uploaded by

    Syncora Rin Ri
    CPI does not fully reflect changes in spending patterns or standard of living for several reasons: [1] It uses a fixed basket of goods that does not account for new products that provide more value. [2] It cannot fully measure improvements in quality. [3] It does not accurately capture price differences between locations. While CPI is useful for measuring inflation and adjusting dollar values, an alternative indicator like Gross National Income Per Capita may better measure standard of living.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
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    of 21

    QUESTION 5:

    CONSUMER
    PRICE
    INDEX
    ALEX GOe

    CHEE ZHENG YI HAO

    ZABRINA

    ENG XIN

    VIVIAN
    CPI DOES
    NOT
    FULLY
    REFLECT
    SPENDING
    PATTERN
    CPI
    Indicator that measures the changes of
    general price level of a fixed basket of
    goods and services typically purchased
    by an average household.
    Malaysian
    Consumption
    Pattern
    SERVICES

    TECHNOLOGICAL GADJET

    EDUCATION
    SERVICES
     Intangible
     Need skills, experience and talent
    FINANCIAL SERVICES

    HEALTH SERVICES

    RISK MANAGEMENT
    PERSONAL GROOMING

    UTILITY SERVICE
    TECHNOLOGICAL
    GADJETS
    Electronic device with specific
    functions
    EDUCATION
     Process of getting
    knowledge or skills

     Increase of awareness
    of importance of
    education
    ADVANTAGES OF
    CPI
    Advantage 1:
    CPI as an economic
    indicator:
     CPI is most widely used
    to measure inflation

     CPI provides
    information about price
    changes

     CPI can be a guide to


    making economic decision
    Advantage 2:

    CPI as a mean of adjusting


    dollar values:

     CPI is used to adjust:

     income payment

     eligibility levels for


    government assistance

     federal tax income


    Actual indicator of
    CPI = NO
    standard of living ?
    Introduction of • New products result in greater
    variety, which in turn makes
    New Goods each ringgit more valuable.

    • Consumers need less ringgits to


    maintain any given standard of
    living.

    • When CPI fails to take new


    goods into calculation, CPI will
    be understated (lower than the
    actual value)
    Unmeasured • Differences in quality of goods
    are difficult to be measured
    Quality Changes
    • Quality is not always
    straightforward (direct) and not
    easy to be measured.

    • Quality is intangible and it is a


    sense of feel.
    Unable to Reflect • The standard living of major
    cities different from that of rural
    Real Situation in areas

    • Most of the time, the price of


    Different Places goods in major cities is higher
    than the rural areas

    • Larger population in the major


    cities drives up the goods’ price
    due to higher demand.
    CPI is an imperfect measure of the
    standard of living due to:-
    • new goods bias
    • unmeasured changes in quality
    • inability to reflect the real situation
    in different places

    Conclusion: An alternative indicator is


    needed to measure the standard of living;
    eg. Gross National Income Per Capita
    Presentation end

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