Question

The below figure depicts the Consumer Price Index for All Urban Consumers: Tuition, Other School Fees, and Childcare in U.S. City Average. The vertical dotted lines indicate the month of September in each year. Please provide an explanation for why the price index looks the way it does. (You likely have first-hand experience with why.) 800 700- 600 Index, 1982-1984 = 100 500 - 400- 300 2000 2005 2010 2020 2015 Vertical lines indicate the month of September for each year

Answer 1

The CPI is calculated by taking price changes for each item in the predetermined basket of consumer goods and services and then averaging them. Changes in the CPI reflect changes in the cost of living in the U.S. Likely in the above graph one can see the increase in spending on education giving rise to development of nation indeed which rose from 300 in Year 2000 to 800 in Year 2020, there is non stop or we can say no diversion in rising index from Years to Years.