1.  What is a mathematical/statistical index?  An arbitrary formula that produces a value that can be used to compare or rate things e.g. Body Mass Index, BMI  It’s also the cost of goods, compared cross- sectionally (Big Mac, Fan Cost) or over time (Christmas, Consumer Price)

2.  Big Mac Index  Body Mass Index (BMI)  Christmas Price Index  Consumer Price Index (CPI)  Fan Cost Index (FCI)

3. Big Mac Index – compare the cost of a Big Mac in different countries to gauge the strength of their currency.

6. Note: you could also do this with a Teen burger, Grande Chai Latte, etc.

8. Price Indices help citizens, businesses and industries follow and predict trends in prices. A price index describes the price of an item compared to a base value measured at a particular time or place. Statistics Canada tracks price changes using several different indices. The most important is the Consumer Price Index (CPI).

10.  To calculate the CPI, Stats Canada collects thousands of price quotations from across the country for a basket of about 600 popular consumer goods and services.  These items range from French fries and bus fares to tuition and internet service.

12.  The cost of: 1 Partridge in a Pear Tree 2 Turtle Doves 3 French Hens 4 Calling Birds 5 Gold Rings 6 Geese 7 Swans 8 Maids 9 Ladies Dancing 10 Lords 11 Pipers 12 Drummers The prices for these items change over time

13.  Represents the cost of taking a family of four to a game.  Includes:  Four general tickets  Two small draft beers  Four small soft drinks  Four regular-sized hot dogs  Parking for one car  Two game programs  Two adult-sized caps The prices for these items change over time

14. 1.What is the base year for the CPI? 1.2002 – look for the year with a CPI of 100. 2.In what year was the cost of the basket of goods about 90% of the base cost? 1.1997 3.What was the CPI in 1990? What does this mean? 1.78; So prices in 1990 were about 78% of the prices in 2002. 4.Describe the change in CPI from 1990 to 1991. What do you notice about the line segment representing this period? 1.CPI increased from ~78 – 83, this is a 5% increase; greatest one year increase. 5.Describe the overall trend in the CPI and its significance. 1.The CPI increases over the years shown. Canadians spend more money each year to buy the same basket of products and services.

15.  A mathematical index is a set of calculated values used to compare things cross- sectionally or over time.  EXAMPLES:  Big Mac Index  Body Mass Index (BMI)  Fan Cost Index (FCI)  Christmas Price Index  Consumer Price Index (CPI) Price Indices

16. 1. Graph the data in the table. Describe the change in gasoline prices over time.

17. Create a new table from this one. Express each price as a percent of the price in January 2006. Gasoline Prices (cents/Litre) 2006 January95.0 = 100% March May July September November 2007 January March May Graph the data in the table.

19. 1. Calculate the average annual rate of inflation from 1990 to 2006. 2. Use your answer to 1. to predict the CPI for 2010. Justify your prediction.

21. The 2006 UBS Prices and Earnings report includes a comparison of clothing prices in 71 cities. The base price is the price in New York. (A) Which cities in this table have index values less than 100? What does this tell you? Dublin, Toronto, Rome, Hong Kong, and Delhi have index values less than 100. This means that clothing prices in these cities are cheaper than in New York.

22. (B) How do clothing prices in Zurich and Hong Kong compare to clothing prices in New York? >Zurich’s index is 115.6. >115.6 – 100 = 15.6 >Clothing prices are 15.6% higher in Zurich than in New York. >For every $100 spent on clothing in New York, you would spend $115.60 in Zurich for similar items. Hong Kong’s index is 75.0. 75.0 – 100 = - 25.0 Clothing prices are 25% lower in Hong Kong than in New York.

23.  p. 218 #1, 3, 4, 5, 8ab, 9, 11