Does an increase in the price of imported Belgian chocolate affect the CPI or the GDP deflator more? Why (Word count: 100 words max.)   b: Cost of a dozen oranges was Rs80 in January 1980 and Rs.170 in January 2018. The average hourly wage for production and nonsupervisory workers was Rs.650 in January 1980 and Rs.2200 in January 2018.  i) By what percentage did the price of oranges rise? ii) By what percentage did the wage rise? iii) In each year, how many minutes did a worker have to work to earn enough to buy a dozen oranges? v) Did workers’ purchasing power in terms of oranges rise or fall?

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Price Index Analysis

A price index is used to measure inflation in most countries and is focused on a collection of products and services significant to a particular economic segment. It is a measure of changing prices over some time. The price index is a scale or a valuable device to measure changes in price levels. The economists randomly choose a certain year as the base year to convert the amount spent on a basket into a price index.