Baalzamon said:
sc94597 said:
Baalzamon said:
You also need to consider when looking at inflation other factors. For example, the huge rise in housing prices has a lot more to do with much larger houses than it has to do with super high inflation on housing. With vehicles, the vehicles we buy today are much better than the ones we bought in 1996 (significantly more features, much safer, better gas mileage, etc.). Computers have consistently gotten cheaper, yet continue to get better and better.
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I'm pretty sure the most common inflation indicies are measurements of the changes in prices of the same exact goods, not an aggregate measurement of spending on homes. They won't compare the prices of an average of 10,000 1 bedroom homes in 1996 to an average of 10,000 3 bedroom homes in 2006. They will compare 10,000 1 bedroom homes to 10,000 1 bedroom homes (of course homes are so much more diverse than bedroom number.)
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They actually aren't completely. They factor in the goods that people will buy in order to feel satisfied. For instance, if the average consumer purchased a New York Strip Steak once a week, but this steak tripled in price in 1 year, but a Filet Mignon did not triple, nor increase at all, they deem that the average consumer would be satisfied with a Filet Mignon steak after this increase, and thus no inflation occurred. Inflation is a lot more than the "basket of goods" that people peg it out to be.
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Hm, well in economics class when we calculate inflation it is for the same exact goods. I guess they "cheat" in the real world. Inflation should be a measurement of how the devaluation of money(caused by its arbritrary production) affects prices of products.
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