1. Calculating inflation using a sim price indexConsider a fictional price index, the Colletable shows information on the market baStudent Price Index (CSPI), based on a typical college student's annual purchases.et for the CSPI and the prices of each of the goods in 2017, 2018, and 2019.pose the foThe expenditure on each item in the marke asket and the total dollar expenditure on market basket are shown for 201;.Perform these same calculations for 2018 and 2019, and enter the results in the following table.201720182019Quantity in Market BasketPrice(Dollars)Expenditure Price(Dollars) (Dollars)Expenditure(Dollars)Price(Dollars)Expenditure(Dollars)Notebooks821624Calculators16464104134Large coffees150230072Energy drinks401205Textbooks108080085105Total costPrice index1.300100Suppose the base year for this price index is 2017.In the last row of the table, calculate and enter the value of the CSPI for the remaining years.9Between 2017 and 2018, the CSPI increased byTabEscFnF1~1@226Between 2018 and 2019, the CSPI increased by%Grade It NowSave & ContinueContinue without savingDELLF2F3F4F5F6F7F8F944# 378* 00%Λ596&29aF10F11+

Answered: Image /qna-images/answer/d4cae7fd-3d2a-49f5-aaee-7f8db675e00b.jpg

Answered: 1. Calculating inflation using a sim…

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter22: Inflation

Section: Chapter Questions

Problem 2SCQ: Construct the price index for a fruit basket in each year using 2003 as the base year.

See similar textbooks

Similar questions

Inflation rates, like most statistics, are imperfect measures. Can you identify some ways that the inflation rate for fruit does not perfectly capture the rising price of fruit?
What is the difference between the price level and the tale of inflation?
The total price of purchasing a basket of goods in the United Kingdom over four years is: year 1=940, year 2=970, year 3=1000, and year 4=1070. Calculate two price indices, one using year 1 as the base year (set equal to 100) and the other using year 4 as the base year (set equal to 100). Then, calculate the inflation rate based on the first price index. If you had used the other price index, would you get a different inflation rate? If you are unsure, do the calculation and find out.
How to Measure Changes in the Cost of Living introduced a number of different price indices. Which price index would be best to use to adjust your paycheck for inflation?
Describe a situation, either a government policy situation, an economic problem, or a private sector situation, where using the CPI to convert from nominal to real would be more appropriate man using the GDP deflate:
What has been a typical range of inflation in the U.S. economy in the last decade or so?
Use the AD/AS model to explain bow an inflationary gap occurs, beginning from the initial equilibrium in Figure 25.6.
Describe a situation, either a government policy situation, an economic problem, or a private sector situation, where using the GDP deflator to convert from nominal to real would be more appropriate than using the CPI.
If inflation rises unexpectedly by 5, indicate for each of the following whether the economic actor is helped, hurt, or unaffected: A union member with a COLA wage contract Someone with a large stash of cash in a safe deposit box A bank lending money at a fixed rate of interest A person who is not due to receive a pay raise for another 11 months
The Consumer Price Index is subject to the substitution bias and me quality/new goods bias. Are the Producer Price index and the GDP deflator also subject to these biases? Why or why not?
The index number representing the price level changes from 110 to 115 in one year and then from 115 to 120 the next year. Since the index number increases by five each year, is five inflation rate each year? Is the inflation rate the same each year? Explain your answer.
Why is the GDP deflator not an accurate measure of inflation as it impacts a household?

SEE MORE QUESTIONS

Recommended textbooks for you

Principles of Economics 2e

Economics

ISBN:

9781947172364

Author:

Steven A. Greenlaw; David Shapiro

Publisher:

OpenStax

Essentials of Economics (MindTap Course List)

Economics

ISBN:

9781337091992

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Brief Principles of Macroeconomics (MindTap Cours…

Economics

ISBN:

9781337091985

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Principles of Economics 2e

Economics

ISBN:

9781947172364

Author:

Steven A. Greenlaw; David Shapiro

Publisher:

OpenStax

Essentials of Economics (MindTap Course List)

Economics

ISBN:

9781337091992

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Brief Principles of Macroeconomics (MindTap Cours…

Economics

ISBN:

9781337091985

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Principles of Economics (MindTap Course List)

Economics

ISBN:

9781305585126

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Principles of Macroeconomics (MindTap Course List)

Economics

ISBN:

9781305971509

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Exploring Economics

Economics

ISBN:

9781544336329

Author:

Robert L. Sexton

Publisher:

SAGE Publications, Inc

SEE MORE TEXTBOOKS