1. The following table shows the quantity of popcorn, Coke, and movie tickets a typical consumer buys. It also shows the prices for those goods in 2014 and 2015. Good Quantity Price in Price in 2014 2015 Рорcorn 3 $5 $4 Coke $6 $8 Movie 6. $4 $5 Ticket Assume that 2014 is the base year. Show your work and all formulas used for full credit. a. What was the price of the “basket" in 2014? b. What was the price of the “basket" in 2015? c. Calculate the CPI for 2014 d. Calculate the CPI for 2015 e. Did the consumer experience inflation or deflation? Calculate the rate of inflation or deflation between 2014 and 2015 using the CPI numbers you calculated above.

1. The following table shows the quantity of popcorn, Coke, and movie tickets a typical consumer buys. It also shows the prices for those goods in 2014 and 2015. Good Quantity Price in Price in 2014 2015 Рорcorn 3 $5 $4 Coke $6 $8 Movie 6. $4 $5 Ticket Assume that 2014 is the base year. Show your work and all formulas used for full credit. a. What was the price of the “basket" in 2014? b. What was the price of the “basket" in 2015? c. Calculate the CPI for 2014 d. Calculate the CPI for 2015 e. Did the consumer experience inflation or deflation? Calculate the rate of inflation or deflation between 2014 and 2015 using the CPI numbers you calculated above.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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2. Alternative price indexes Because there isn't one single measure of inflation, the government and researchers use a variety of methods to get the most balanced picture of how prices fluctuate in the economy. Two of the most commonly used price indexes are the consumer price index (CPI) and the GDP deflator. The GDP deflator for this year is calculated by dividing the using by the using and multiplying by 100. However, the CPI reflects only the prices of all goods and services Indicate whether each scenario will affect the GDP deflator or the CPI for the United States. Check all that apply. Shows up in the... GDP Scenario Deflator CPI A decrease in the price of a Chinese-made car that is popular among U.S. consumers An increase in the price of a Waterman Industries deep-water reel, which is a commercial fishing product used for deep-sea fishing, made in the U.S., but not bought by U.S. consumers
A price is a statement of average prices relative to a base year value of a. deflator; 100 b. index; 100 c. deflator; 1,000 d. index; 1,000
Please answer the following questions. Thanks.
2 The standard definition of a “recession” is Select one: a. two or more consecutive quarters of falling Real GDP. b. the lowest point in a business cycle. c. the declining production phase of a business cycle
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