Consumer Price Index and Aggregate Demand

Consumer Price Index (CPI)

• The table shows the Consumer Price Index (CPI) for selected years.
• CPI in 1929: 20
• CPI in 1984: 100
• CPI in 1995: 120

Calculating Cost Changes Using CPI

• Problem: Determine the cost in 1995 of goods and services that cost 50 in 1929.
• Formula: \text{Cost in 1995} = \text{Cost in 1929} \times \frac{\text{CPI in 1995}}{\text{CPI in 1929}}
• Calculation:\text{Cost in 1995} = $50 \times \frac{120}{20} = $50 \times 6 = $300
• Answer: It cost 300 in 1995 to buy the same goods and services that cost $$50 in 1929.

Aggregate Demand Curve

• The aggregate demand curve is mentioned.