Macroeconomists define inflation/deflation in multiple ways. Please begin by giving us the definitions in terms of the consumer price index (CPI), the producer price index (PPI) and the GDP deflator.
a) From the point of view of the average standard of living of U.S. citizens, why is the CPI the best measure of inflation/deflation?
b) Nonetheless, with reference to an economy with just two commodities, chicken and beef, explain why “substitution effects” mean that the CPI can be misleading. In this two-commodity economy, suppose that, between year 1 and year 2, there is a shift to the right in the supply curve for chicken and a shift to the left in the supply curve for beef, holding everything else (e.g., the demand curves for chicken and beef) constant.
c) With reference to the following data about a two-commodity economy, explain how macroeconomists calculate the GDP deflator, thereby solving the problem that substitution effects pose for our efforts to measure the effects of inflation/deflation on the average standard of living.
2009 nominal GDP 2018 nominal GDP
Bananas 15 at $0.20 20 at $0.30
Oranges 50 at $0.22 60 at $0.25
d) What patterns can be discerned in the data on inflation/deflation since World War II? In particular, please identify business-cycle peaks, business-cycle troughs, recessions, economic expansions, and trend rates of change during the Golden Age of U.S. economic development (1950-1973), the Neoliberal Era (1982-2007), and since the 2007-08 financial crisis.
According to George E. Moore, ethical claims all concern human conduct while philosophical ethics ultimately concerns itself with knowledge of what “good” is. Moore also believes philosophical ethics ought to concern itself with what is good instrumentally, or good as a means rather than good as an end, as a property. According to Moore, what is intrinsically good, or the property of “goodness” is not an analyzable property. For Moore, what “good” is, or “goodness”, as an individual property, is “unanalyzable”, or, undefinable. Therefore, any claim which gives a definition of “goodness” is attributing goodness to something, rather than identifying what goodness itself, as a property, is. Moore accuses those who make this error of committing the “naturalistic fallacy”. He believes that moral naturalists — philosophers who maintain that moral properties exist and can be objectively studied, through biology and sciences — are primarily responsible for this mistake. Moore thought philosophers committed the naturalistic fallacy when attempting to define “good” by moving from one claim that a thing is “good” to the claim that “good” is that thing. Moore thought one could not identify “good” with a thing one believes is “good”. In order to test and determine whether an attempt at defining “good” is correct and not a concealed assignment is what Moore called the “open question argument.” Moore proposed that if “goodness” is a natural property, then there is some correct explanation of which natural property it is. For example, maybe “goodness” is the same property as “pleasantness”, or the same property as being “desirable”. Further, a correct property must be identified to fill in an identity statement of the form “goodness = __________”, or, “what is good is _________”. This kind of identity statement can be correct only if both terms on either side of the identity sign are synonyms for proficient speakers who understand both terms. Synonymy of the two terms is then tested through substitution of a term. Moore’s idea is that substitution of synonyms for one another preserves the original proposition that a sentence expresses. For example, using the sentence: “what is good is pleasant.” For this to pass Moore’s test, the sentence would have to express the same thing as “what is pleasant is pleasant.” Moore believed it was obvious that these two sentences do not express the same proposition. In thinking that what is good is pleasant, Moore thought one is not only thinking that what is pleasant is pleasant. According to Moore, there is an “open question” as to whether what is good is pleasant, and it can be understood when someone doubts the generated statement. However, t>GET ANSWER