4 ms·
Forgive me for an ignorant question, since I haven't studied economics: how are is the purchasing power calculated over time then? Here's my naive/intuition ba
by GolDDranks 5y ago
Forgive me for an ignorant question, since I haven't studied economics: how are is the purchasing power calculated over time then?
Here's my naive/intuition based attempt to guess how it works: If it varies as a continuous function, and small increments are measurable/well-defined (i.e. stuff like TV's and iPhones don't get invented as point-like events enough to screw the continuity), one could think that treading back increment by increment and then taking a limit would yield a valid time series. Then, everything outside that time series would not be indicative of the purchasing power of dollar, but the price of that specific good or service.
Does my reasoning make sense?
- ghaff 5y agoTo quote the BLS: CPI is "a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services." That market basket gets changed over time which makes comparisons harder and harder over time because you're buying things that were maybe "typical" for those two points in time but are very different. Imagine telecoms and entertainment costs for a typical 1970 consumer vs. today.