Look at recent Consumer Price Index (CPI) data, Explain the relationship between the CPI and the business cycle.

News Assignment 2: Inflation

Look at recent Consumer Price Index (CPI) data:

http://www.bls.gov/cpi/home.htm#data

1) Create or find a graph of the CPI from 1913 to the present.

2) Find a graph of GDP from 1913 to the present, & look at the Business Cycles.

Explain the relationship between the CPI and the business cycle.

Cite specific time periods that support your explanation.

3) \”Workers\” average hourly earnings in September 2013 rose a meager 0.1 percent. For the typical employee, that amounts to 24 cents per day.\”

a. Find an article about recent U.S. wage increases. (As always, include the URL or a copy of the article)

b. Explain how stagnant wages affect future GDP growth (hint: which GDP component is affected? Percentage-wise, is it an important component of GDP?)

c. What happens when the rate of inflation is higher than the growth in wages?