# Economics+Unit+4+Lesson+2

```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
&times;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
________________
________________
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.
```