Activity: CPI Basket Follow the directions for each numbered step in figuring a CPI basket. 1. Go to local stores or do an online search at your favorite shopping place, and then price the items on the following chart under “Current Price.” This is your CPI basket. 2. Once you have determined current prices, ask a grandparent or someone older than you the cost of each item when he or she was your age, as well as the year. If the exact year is not known, ask for an educated guess or do a little research online for the information for the year the person gave you. This number will be considered the base year to which you will compare current prices. 3. Total up the prices for the current year and for the year of the person you surveyed when he or she was your age. At this point, you should have two numbers, with the current year number being considerably higher. 4. Use the following formula once that is accomplished. You will need to have memorized the formula by the time you take the Unit Test!) CPI = total cost of the CPI basket at current period prices ×100 to otal cost of the CPI basket at the base period prices 2.14) Use the formula from Step 4 to calculate the CPI. CPI =_________________________ Current Price Base Price mortgage/month (Ask your parents for this one.) ________________ ________________ car payment/month ________________ ________________ 1 dozen eggs ________________ ________________ 1 gallon of milk ________________ ________________ 1 pound of ground meat ________________ ________________ cost for one doctor’s visit (regular doctor, not the emergency room) ________________ ________________ total of school supplies bought back in August ________________ ________________ a collared shirt ________________ ________________ a pair of pants ________________ ________________ a pair of socks ________________ ________________ a pair of tennis shoes ________________ ________________ a movie ticket ________________ ________________ a night out to dinner (nothing fancy) ________________ ________________ phone bill/general store ________________ ________________ ________________ ________________ Total: This is a rather simpliﬁed way of ﬁguring out CPI. Economists go through much more mathematical gymnastics when doing their job, but the difference in the two numbers should show you how much prices have increased over the years. Throughout the span of the years in question, the CPI probably grew faster at some times than at other times. That has much to do with the general economic health of the country. In those years when it did not grow that much, the CPI can highlight years when the economy struggled. You can do your own research on how the economy grew or declined by looking at years in between the current year and the year your older friend was your age. Looking into economic data can be interesting and even fun.