Ifo Business Climate Survey

And finance Allah shmoop What is general price level You

go to the sort of by your usual weekly staples

canned chili caramel dip frozen bananas pickled kiwi Ryan's and

replacement anima tubes Every week you buy the same things

weekend week out Your grocery cart has the same four

items It's been like this for years Same stuff every

week You're a creature of habit And yes you have

those digestive problems that you might want to check out

But that's for another video OK overtime prices for the

individual items move in all different directions Prices for some

of the items might go up while prices for others

might go down even when everything moves in the same

direction While the prices don't change at the same rate

some see big jumps in price Some barely see moves

at all For instance in the past year the price

of a can of chili rose from a buck forty

six to a buck forty nine an increase of about

two percent No big deal however Pickled kiwi rinds have

jumped to seven dollars Sixty nine cents from seven dollars

nine cents an increase of nearly eight and a half

percent Yeah much bigger deal Meanwhile the price of anima

tube's actually fell during the year leaking or dipping to

six dollars forty nine cents from six seventy four Well

those air individual price levels But what about general price

levels Will the general price level is a measure of

prices across an entire system not just the direction of

a price the direction of all prices You know general

prices Right So this week all the items in your

grocery cart cost you twenty dollars Two cents That's your

general price level If you want to make an economic

indicator out of it well call it your personal general

price indicator or PGP I once you know the general

price level while you contract overall price changes over time

So a year ago the four items that you buy

every week totaled nineteen dollars Forty two cents This year

Twenty dollars two cents Your PGP I rose three point

one percent from last year And there's a map new

minus old overalls that you get that percent growth formula

thinking well In real life he's general price levels are

used to track inflation or deflation though well it doesn't

happen all that often deflating things People like to rattle

off inflation stats but it's actually a tricky thing to

really track Honestly you're fairly er accurately in a complex

economy prices for various products are moving in different directions

all the time and a different rates all the time

Combining all this action into a single stat well is

extremely complicated There are a lot of competing indicators that

measure the general price levels in the overall economy The

most high profile of these is the Consumer Price index

or CP I It works like the total price is

for your weekly grocery basket except that the CP I

includes a big basket like a basket with a representative

sample off of all the stuff people by at least

all the stuff that CPS measures And it's like thousands

of things Your personal consumer price index may include just

those four items that you buy every week You know

the basket where one in four of the items are

enema tube But the C P I R consumer price

index is a lot broader thousands of items that people

die all the time or in that index So yeah

enema to prices make up well hopefully far less than 00:03:13.87 --> [endTime] twenty five percent of that index What