The Consumer Price Index (CPI)

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Consumer Price Index (CPI)
The consumer price index is a measurement of the changes in price levels of the market basket for consumables in terms of services and goods purchased by households. It is a statistical estimate that is constructed with the use of sample prices of representative goods or services collected periodically. CPI is the benchmark guide for inflation used by economists to make adjustments on cost of living.
As the main GDP indicator, CPI determines the fluctuations in the interest rates which are determined by its stability. It is also important to note that CPI is swayed by many other factors such as food security, political environment and geographical factors such as floods and earthquakes among others.
When compared …show more content…

The surge did not last for long because of the near collapse of the world economy towards the end of the same year, 2008. The main measurement of the Australian dollar against other currencies is the Trade Weighted Index (TWI) which is weighted in accordance with the significance to trade flows in Australia. However, Australian dollar fluctuations against the US dollar are larger that the WTI. The reason behind is that TWI only concentrates on the rise and fall of the Australian dollar.
Trade - exports and imports
When talking of exports and imports, an economist looks at the trade balances as a measure of economic health of any government and the relationship with its trade partners. Of main concern is the trade deficit which is the current currency value of exports less the current currency value of imports. On average, trade should constitute a quarter of the economic activities in any country. However, this is not practical for many economies including the US because of its huge demand for goods.
While trade is the exchange of goods and services, this exchange plays a key role in an economy. In order to have good trade between countries, proper investment and trade policies must be

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