Although changes in the CPI provide interesting insights into the overall performance of the economy, these changes have little practical impact on the lives of ordinary people.

Question

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Changes in the CPI indicate whether the economy is experiencing inflation, disinflation, or deflation. For example, a significant increase in the CPI indicates that prices of a wide variety of consumer goods are rising. Moreover, changes in the CPI can directly influence the wages some people receive (through cost of living adjustments), the interest rates some people pay, the benefits the government pays to various recipients, and the tax brackets that are used to determine the income tax rate applied to earnings.

Although Changes in the CPI Provide Interesting Insights into the Overall