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Calculating the Candy Price Index: A Classroom Inflation Experiment

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Author Info
Denise Hazlett () (Whitman College)
Cynthia D. Hill (Idaho State University)
Abstract

In this classroom experiment, students develop a price index based on candy-purchasing decisions made by members of their class. They use their index to practice calculating inflation rates and to consider the strengths and weaknesses of the consumer price index (CPI). Instructors can use the experiment as an introduction to the topic of inflation and how it is measured. The exercise also provides a concrete example of the sources of bias in the CPI, promoting discussion of the measures the Bureau of Labor Statistics has taken to reduce bias. The experiment, including follow-up discussion, fits into a 50-minute class period. The authors and other professors have used the exercise in introductory and intermediate macroeconomics courses, in classes of 10 to 135 students.

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Publisher Info
Article provided by Helen Dwight Reid Foundation in its journal Journal of Economic Education.

Volume (Year): 34 (2003)
Issue (Month): 3 ()
Pages: 214-223
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Handle: RePEc:jee:journl:v:34:y:2003:i:3:p:214-223

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Related research
Keywords: active learning; classroom experiment; Consumer Price Index; CPI; inflation;

Find related papers by JEL classification:
A22 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - Undergraduate
E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Brian Motley, 1997. "Bias in the CPI: "roughly right or precisely wrong"," FRBSF Economic Letter, Federal Reserve Bank of San Francisco, issue May 23. [Downloadable!]
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Mitchell, David & Rebelein, Robert P. & Schneider, Patricia & Simpson, Nicole B. & Eric Fisher, . "A Classroom Experiment on Exchange Rate Determination with Purchasing Power Parity," Vassar College Department of Economics Working Paper Series 87, Vassar College Department of Economics. [Downloadable!]
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This page was last updated on 2009-12-21.

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