Government survey-takers noted the following prices each year for the listed items. Items 2016 2017 2018 Pizza $10 $20 $20 Cell Phone Service $90 $180 $180 Crude Oil (barrel) $90 $180 $90 a. Calculate the percentage increase in PPI from the base year, 2016 to 2017. b. Calculate the percentage increase in CPI from the base year, 2017 to 2018.  c. What is likely to happen to CPI if the unemployment rate declines below the natural rate

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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.