### Exploring Price Indexes

5. The reading explained how to measure inflation with the CPI, but it never told us what the CPI is telling us about inflation today. You can get recent data on the rate of inflation at several places on the Web. One is <stats.bls.gov/eag/eag.us.htm>. (You may have to click a button or two to get the data you need.

a. By how much has the price level risen in the past year?
b. Does it appear that inflation is increasing or decreasing?
c. There are two different versions of the CPI, the CPI-W and the CPI-U. How do they differ? Are they given the same readings on price change?

6. Stew D. Huss is a hard-working student who is concerned with the rising cost of getting an education. To see what is happening to the costs of education, he constructs a Cost of Studying Index. The market basket he uses and the prices he observes are given below.

 Market Basket: Price in First Period Price in Second Period Item Amount Pencils 2 \$.08 \$.12 Paper 10 \$.05 \$.06 Know-Doze 1 \$.09 \$.06

 The value of the market basket in the first period is: \$ The value of the market basket in the second period is: \$ By what percentage has the cost of studying changed from the first to the second period? %