CPI Practice AP Macroeconomics

The video tutorial explains the concept of the Consumer Price Index (CPI) and how it measures inflation by comparing the cost of a Market Basket over different years. It provides a step-by-step guide to calculating CPI using different base years (2009, 2010, and 2011) and explains how to interpret the results. The tutorial emphasizes understanding the Market Basket and its role in determining price changes over time.

What is the significance of the Market Basket in calculating the Consumer Price Index (CPI)?

How do you calculate the CPI for a given year using the Market Basket?

Explain what a CPI value of 200 indicates about price changes since the base year.

Describe the process of switching the base year for CPI calculations.

What does it mean if the CPI is less than 100 when using a specific base year?