Question
The CPI is a tool that economists use to describe how prices change from year to year but it can also be useful as a
The CPI is a tool that economists use to describe how prices change from year to year but it can also be useful as a tool to change dollar values from nominal to real numbers. The primary reason for doing this is that from year to year, prices for the same item tend to rise. So when we compare nominal values, we might not be (to abuse the phrase) comparing "apples to apples." This problem is meant to demonstrate this idea in a more or less trivial situation.
Follow this link. The table you open shows the box office revenue generated by movies in each of its opening weekends. What you will notice are two things: 1. The movie box office revenue is not adjusted for inflation. 2. Most of the top revenue earners are from recent years.
Opening weekend box office receipts are often used as a way of gauging a movie's popularity. It's a proxy for how many tickets are sold, therefore, how many people attending the movie - ergo popularity.
However, with insight about inflation, you should interpret these numbers with caution.
Question: Why might numbers that are not adjusted for inflation be mis-leading?
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