Tiffin Effects of Consumer Price Index Trends on American Households Discussion

Introduction

In this paper, you will apply what you have learned in Chapter 6 to the firm or business you selected in order to see how the concepts can be applied to a business situation. In this exercise, you will examine real-world GDP data and explain how businesses can use historical and current data to make more informed decisions. Please note that nobody can completely accurately predict the future–so when you discuss the historical time periods, put yourself in the shoes of someone from that period and only use data that person would have available to them.

Activity Instructions

Go to the Bureau of Labor Statistics website and click on “Data Tools” (if you hover over the link there will be a dropdown menu, but click on the header). That will bring you to the page with data (http://www.bls.gov/data/). Then click on the “Top Picks” link for “All Urban Consumers” under the Inflation & Prices table (it is the first yellow star on the blue background in the list as of the time of this writing). Select “U.S. All items, 1982-84 = 100” and click “Retrieve data” from the bottom of the page. Use this data for the first few questions below.

Part 1

What has happened to the CPI over the past year? Over the past 3 years? Over the past 10 years? What has the rate of inflation been over those time periods? If you select “Include graphs” at the top and then click on “Go”, a graph of the data will appear. Are there time periods in that graph when the CPI is decreasing or is the CPI always increasing over that time period? Are there any relatively large declines in the CPI? What does this mean happened to prices in the United States?

Part 2

For your chosen business, how does a relatively slow increase in the CPI affect the choices it makes? If the CPI increases at a much more rapid rate, how might those decisions be affected? Will different decisions need to be made, or do those decisions just need to be made more often? What if the CPI declines significantly or over an extended period of time? Think about both the output and inputs of the firm.

Be sure to spend at least half of the paper on the application to business. Do not only focus on the data.

Writing and Submission Requirements

1.5-2 pages (approx. 300 words per page), not including title page or references page

For standard requirements, review the Discussion and Written Assignment Expectations.

Tips for Success

• Be sure to refer to the Essay Tips for Success as you draft your submission. Also, note that this paper does ask for a summary of the data; spend about half your paper summarizing the data to answer Part 1. Discuss the general trends–are there periods where the CPI seems to decrease or grow slower than normal? Is it always increasing or are there ‘random’ times the CPI decreases?
• Also note that the prompt does say to spend at least half your paper on the analysis (Part 2), so the analysis portion is still important.

Weekly Learning Goal(s): 4

Explain how changing CPI and inflation rates affect business decisions. (CLO 3, 4)