For measuring these changes in general prices a convenient device known as index numbers is employed by the government and others. The prices for any year may be taken as a standard by which the prices of any other year may be measured. For purposes of illustration, we may take 1902 as the standard year and by it measure the price level of 1912, as follows:

Thus, by considering only the six commodities named, we find that the price level of 1912 is five per cent higher than it had been in 1902. It will be noticed, however, that during this period the price of hogs remained unchanged, and that the prices of wheat and cattle fell. If the consumption of an individual were confined to these three commodities, he would, during the ten years under consideration, have enjoyed a falling price. Yet the typical consumer, since he is likely to purchase a great many different commodities, would have found at the latter date that the purchasing power of his money had actually-declined, compared to its purchasing power in 1902.