. In each scenario, determine the effects on the CPI and the GDP deflator: A. Starbucks raises the price of Frappuccino (assuming Frappuccino is in the CPI basket). B. Caterpillar raises the price of the industrial tractors it manufactures at its Illinois factory. C. Armani raises the price of the Italian jeans it sells in the U.S. (assuming this good is included in the CPI basket). Correcting dollar figures from different times:
Please dont answer Question 1. Just the scenario for Question 2.
Computing the CPI:
1. The table below shows a hypothetical typical consumer’s market basket that consists of 10 units of beef and 20 units of chicken.
Year
2018 $4 $4
2019 $5 $5
2020 $9 $6
A. Compute the CPI in 2019.
B. What is the CPI inflation rate from 2019-2020? CPI vs.
2. In each scenario, determine the effects on the CPI and the GDP deflator: A. Starbucks raises the price of Frappuccino (assuming Frappuccino is in the CPI basket).
B. Caterpillar raises the price of the industrial tractors it manufactures at its Illinois factory.
C. Armani raises the price of the Italian jeans it sells in the U.S. (assuming this good is included in the CPI basket). Correcting dollar figures from different times:
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