Macroeconomics -- Inflation Domestic and National News Essay

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Macroeconomics -- Inflation

Domestic and national news are constantly talking about the rapid changes and increases in prices of basic commodities today. Prime commodities for a specific economy or country are discussed with the same intensity as changes in the global market prices for important, universal necessities such as oil. Prices of basic commodities are not the only ones susceptible to increasing in value. Services, too, particularly wages, are subjected to increases ultimately driven by union power or collective bargaining agreements between manufacturing companies and corporations and its workforce. Changes in the supply of raw materials used to produce products and commodities and services required to mass produce these products or to provide services on a large scale are the drivers that serve as catalysts to price increases. This increase in prices and costs of products and services over time, respectively, is called inflation (Maunder et al., 2000, p. 147).

Related to the concept and issue of inflation is the Consumer Price Index or CPI, which is a measure established to monitor and determine the change in price levels of goods and services, commonly called the "market basket" of goods and services.

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CPI is a useful tool in determining specific categories or sub-categories of goods and services that are changing or rising steadily over a specific period of time. This change in price level is often computed or compared against the price level for a specific "base period," which could be the cost of a specific group of goods and services for the year (for example) (p. 149). Thus, the CPI is a good indicator not only of the price level changes for specific groups of goods and services, but also in providing a general overview of the overall price level increase in goods and/or services for a particular economy or country.

In the article by CNN Money entitled, "Food prices on the rise as drought worsens," author Tymkiw (2012) discussed the ramifications of….....

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