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.Recently, in the USA we see an increase in CPI of 7.5%/yr. the Fisher equation MV=PY (B). Based on the fisher equation, what is the significance of potential GDP?

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter17: Inflation

Section: Chapter Questions

Problem 5SQ

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(A).Recently, in the USA we see an increase in CPI of 7.5%/yr. the Fisher equation MV=PY (B). Based on the fisher equation, what is the significance of potential GDP?

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Locate an example of the localized Atlanta/Sandy Springs/Roswell CPI that is performing better than the national CPI. State the two numbers you researched--local and national-- and forecast based on the October data how you think the November data will look for both local/national CPIs. Will the local CPI continue to perform better than national? Will it slow down to align with national? Locate an example of the localized Atlanta/Sandy Springs/Roswell CPI that is performing worse than the national CPI. State the two numbers you researched--local and national-- and forecast based on the October data how you think the November data will look for both local/national CPIs. Will the local CPI improve so that it is more in line with the national CPI?
The Consumer Price Index (CPI) is a measure of the average change in price over time from a designated reference period, at which it equals 100. The index is based on prices of basic consumer goods and services. The table provided lists the CPI for several years from 1960 to 2012. If the price change in cars parallels the change in the CPI, what would a car sell for (to the nearest dollar) in 2012 if a comparable model sold for $7,500 in 1999? Year CPI 1960 29.6 1973 1986 44.4 109.6 156.9 1999 2012 229.6 In 2012, a car would sell for approximately $ 58,176 (Round to the nearest dollar.)
Consider the data for a known country for the consumer price index (CPI), by components:(base year 2015 = 100) a) Interpret the value of the CPI index in December 2018. b) Calculate the year-on-year inflation rate corresponding to the CPI, in December 2018. c) Suppose the GDP Deflator in 2020 is predicted to be 1.09. What can be interpreted?
Which of the following is a reason why the Traditional CPI overstates the true price level? A) The Traditional CPI does not include goods that are imported. B) The Traditional CPI does not regularly account for improvements in the quality of various goods. C) The Traditional CPI does not consider investment and capital equipment goods. D) The Traditional CPI is reported on a monthly basis which is too infrequent for the BLS to provide an accurate measure of the price level.
The nominal GDP for 2021 is $125 billion, and the real GDP for 2021 is $100 billion. (1). Calculate the GDP Deflator in 2021? Show your calculation. (2). Also assume that the GDP deflator in 2020 was 100. What is the inflation rate over the 1-year period? Show yourcalculation.
Calculate the inflation rate using the GDP deflator based on the Laspeyres, Paasche, and chain- weighted indexes of GDP (use the approximate formula).
Which component of national expenditure will be affected when a company buys a new AC for its manager’s office? The GDP deflator is a price index that does not have a base period. Evaluate the reliability of estimating inflation from a price index that does not have a base period.
Suppose that typical CPI basket for consumers contains 3 goods: 5 wheels of cheese, 3 t-shirts, and 10 gallons of gasoline. The prices of the goods in 2019 and 2020 are listed below: Item Prices 2019 Prices 2020 Cheese $5 $10 T-shirt $10 $15 Gallon of Gasoline $3 $6 A) Find the cost of the CPI Basket in 2019: B) Find the cost of the CPI Basket in 2020: C) Using 2019 as the base reference period, calculate the CPI for 2020 D) What is the inflation rate in 2020? E) Suppose that you made $40,000 in 2019 and $41,000 in 2020. What has happened to your real income from 2019 to 2020?
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