The computation of inflation is both complex and controversial. It is complex because it involves th

monitoring of a large bundle of goods across the country and by region. It is controversial because there is debate as to what should be included in the bundle. Since the government has to make inflation-adjusted payments, it has an incentive to include goods in the bundle that have had falling prices. Federal Reserve Chairman Alan Greenspan addressed the issue of bias in the computation of the Consumer Price Index during testimony before the House Budget Committee in 1997. His opening statement can be found on the Federal Reserve Web site at http://www.federalreserve.gov/BOARDDOCS/... Read this testimony and then answer the questions that follow.

a) How certain is Greenspan that the Consumer Price Index overstates the cost of living? How does Greenspan define an unbiased cost of living index?

b) What does Greenspan consider to be the %26quot;major reason%26quot; for the bias in CPI calculation? How much higher does Greenspan think the official inflation rate is in comparis

The computation of inflation is both complex and controversial. It is complex because it involves the?

Why the computation is complex isn%26#039;t as complex as the reasons. We invade the middle east in 2002 and the price of oil was $25/barrel. Today nearly $100/barrel. Lay down with dogs and wake up with fleas.

The computation of inflation is both complex and controversial. It is complex because it involves the?

Chance for you to do some homework.