Price and cost indices have three major uses: the general measurement of inflation, the calculation of real values (deflation) and the calculation of indexed values.
This lesson covers not only the measurement of inflation, but also different ways of expressing change in indices, including the calculation of monthly, quarterly, annual and cumulative change in index values.
Furthermore, in this lesson you will learn about some less familiar index terms and concepts, such as working-day adjustment, seasonal adjustment, trend, and price and pay legacy.
Finally, we conclude with an overview of different calculations performed with the help of indices, such as the calculation of real values, the compilation of index clause agreements and the impacts of individual price changes on the total index. Our examples are the conversion of 1963 money into 2002 money; drafting a rental agreement; and the impacts of car price changes on the consumer price index.
| Topic 4.1: | Measuring inflation |
| Topic 4.2: | Different ways of expressing change in index values: one-month change |
| Topic 4.3: | Quarterly change |
| Topic 4.4: | 12-month change and average annual change |
| Topic 4.5: | Cumulative change |
| Topic 4.6: | Other change values |
| Topic 4.7: | From working-day adjustment to pay legacy |
| Topic 4.8: | Deflation or calculating real values |
| Topic 4.9: | Agreements with an index clause |
| Topic 4.10: | How an individual price change impacts the total index |
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