Which is a more meaningful measure of “inflation” – the one using the CPI including energy and food prices, or the one using the CPI excludingenergy and food prices?

Measurement of Inflation and Economic Growth
Question Set 1
1) Which is a more meaningful measure of “inflation” – the one using the CPI including energy and food prices, or the one using the CPI excludingenergy and food prices? Why? From which perspective?
2) Try the CPI Inflation Calculator: http://www.bls.gov/data/inflation_calculator.htm to determine the historical price of something you might buy today. (Type a dollar amount in any year at the top. Select the year at the bottom to determine how much the top amount was worth in the bottom year.) Remember, prices of all expenditure categories have not changed at the same rate. Any calculation you make with the calculator is based on the changes in the “CPI-U for all Items.” Reflect on these two different $ amounts and try to provide an explanation.
3) Take a look at the details of the most recent Consumer Price Index news release: http://www.bls.gov/news.release/cpi.htm
Do you see any specific product groups that went up or down in price more or less than the average? Can you suggest any factors that may have affected those product prices?
Question Set 2
1) What do the inflation rate and the growth rate of Real GDP have in common?
2) How do they differ?
3) Explain the consequences of an inflation rate of 2-3%, and a RGDP growth rate of 2-3% for an economy like the U.S.
4) Would your answer differ if the inflation and RGDP growth rates were both around 10%? Explain.
Question Set 3
Between 1981 and 2011 the nominal wage rate in the U.S. more than doubled, but the real wage rate stayed roughly constant, because the increase in the nominal wage rate just kept up with inflation.
1) How can this fact potentially explain the mortgage crises, which led to the financial crisis in 2007-2008, leading the U.S. economy to the Great Recession, which officially started in Dec 2007 and was over by June 2009?
For a graphical illustration, see the next page below. For a broader view, rely on the information from this movie:https://www.youtube.com/watch?v=QozGSS7QY_U
2) What reactions did you have while watching this movie?
3) What were the most impressive facts that you either were not aware, did not remember, or helped explain both how the crisis started, and what measures were taken to stabilize the situation?
Please use a title that reflects the main idea in the sentences that you post.

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