Escolar Documentos
Profissional Documentos
Cultura Documentos
2005
RM1
RM2
2006
2007
(RM1 per bowl x 4 bowls of soup noodles) + (RM2 per plate x 2 plates of fried rice) = RM8 per basket
2006
(RM2 per bowl x 4 bowls of soup noodles) + (RM3 per plate x 2 plates of fried rice) = RM14 per basket
2007
(RM3 per bowl x 4 bowls of soup noodles) + (RM4 per plate x 2 plates of fried rice) = RM20per basket
Step 4: Choose One Year as a Base Year (2005) and Compute the Consumer Price Index in each Year
2005
2006
2007
Step 5: Use the Consumer Price Index to Compute the Inflation Rate from Previous Year
2006
2007
6%
32%
5%
16%
2%
1%
21%
4%
3%
goods and
services
N o m in a l G D P
G D P d e fla to r =
100
R eal G D P
Nominal GDP
USD$ (millions)
CPI Peninsular
Malaysia (Index)
2004
426508
474048
105.859
2005
447818
519451
108.993
2006
474392
572555
112.927
GDP Deflator
CPI Peninsular
Malaysia (Index)
Inflation
426508.00
474048.00
111.15
105.86
2005
447818.00
519451.00
116.00
108.99
0.00
2.96
2006
474392.00
572555.00
120.69
112.93
6.68
105.86
RM300 x
26.46
RM1, 200
2007 Thomson South-Western
Indexation
When some dollar amount is automatically
corrected for inflation by law or contract, the
amount is said to be indexed for inflation.
Summary
The consumer price index shows the cost of a
basket of goods and services relative to the
cost of the same basket in the base year.
The index is used to measure the overall level
of prices in the economy.
The percentage change in the CPI measures
the inflation rate.
Summary
The consumer price index is an imperfect
measure of the cost of living for the following
three reasons: substitution bias, the
introduction of new goods, and unmeasured
changes in quality.
Because of measurement problems, the CPI
overstates annual inflation by about 1
percentage point.
Summary
The GDP deflator differs from the CPI because
it includes goods and services produced rather
than goods and services consumed.
In addition, the CPI uses a fixed basket of
goods, while the GDP deflator automatically
changes the group of goods and services over
time as the composition of GDP changes.
Summary
Ringgit figures from different points in time do
not represent a valid comparison of purchasing
power.
Various laws and private contracts use price
indexes to correct for the effects of inflation.
The real interest rate equals the nominal
interest rate minus the rate of inflation.