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3) What are some of the issues associated with the
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- 1. Calculating inflation using a simple price index.2. Calculating and categorizing inflation This table indicates the historical level of the Consumer Price Index (CPI) for the United States for 1921, 1922, and 1923. Complete the table by (1) selecting the inflation rates for 1922 and 1923, and (2) indicating for each year whether there has been inflation, deflation, or hyperinflation. Year CPI Inflation Rate Change in Price Level 1921 17.9 — — 1922 16.8 1923 17.1 What rates of inflation for 1924 would be consistent with disinflation between 1923 and 1924? Check all that apply. 11.8% 1.7% 1.6% 51.8% What rates of inflation for 1924 would be consistent with hyperinflation? Check all that apply. 120.0% 100.0% 15.0% -1.8%(8) The consumer price index using a __________________________ __________________________ __________________________ __________________________ __________________________ to calculate the index value.
- 17) The inflation rate for the current year is measured by which equation? (...using the CPI = consumer price index) 18) A country's consumer price index (CPI) was 150 last year, and this year it is 170. What is its inflation rate for this year? 19) Suppose that the consumer price index (CPI) was 140 in 2017 and 147 in 2018. What was the country's inflation rate during this time? 20) Refer to the following graph to answer the next question. European Union (EU) and US inflation - Selected Years Data based on OECD estimates Rate of Inflation 14% 12% 10% 8% 6% US 2% 0% 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 929394959697 Years (1970-1997) Is there a relationship between US inflation and EU inflation? 14% 12% 10% 8% 2% 0%4. Determinants of aggregate demand The graph below is associated with a hypothetical country. Consider an increase in aggregate demand (AD). Specifically, aggregate demand shifts to the right from AD₁ to AD2, causing the quantity of output demanded to rise at each price level. For instance, at a price level of 140, output is now $400 billion, where initially it was $300 billion. PRICE LEVEL 170 160 150 140 130 120 110 100 90 AD 2 AD1 ?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 Treewood Equipment feller buncher, which is a commercial forestry machine made in the U.S. but not bought by U.s. cons consumers An increase in the price of a Japanese-made television that is popular among U.S. consumers
- 6. Which of the following is not correct? * The consumer price index gives economists a way of turning dollar figures into meaningful measures of purchasing power. The consumer price index is used by economists to measure the inflation rate. The consumer price index is used to monitor changes in the cost of living over time The consumer price index is used to measure the quantity of goods and services that the economy is producing.2. Aggregate supply (AS) denotes the relationship between the __________________ that firmschoose to produce and sell and the _________________, holding the price of inputs fixed.(A) total quantity; price level for output (B) type of goods; input price of raw materials(C) price of goods; number of employees (D) total inputs; types of goods1. Calculating inflation using a simple price index Consider a fictional price index, the College Student Price Index (CSPI), based on a typical college student's annual purchases. Suppose the following table shows information on the market basket for the CSPI and the prices of each of the goods in 2019, 2020, and 2021. The cost of each item in the basket and the total cost of the basket are shown for 2019. Perform these same calculations for 2020 and 2021, and enter the results in the following table. Notebooks Calculators Large coffees Energy drinks Textbooks Total cost Price index Price Cost Price Quantity in Basket (Dollars) (Dollars) (Dollars) 10 15 50 7 1 100 100 150 1 150 50 2 100 10 100 1,000 5 5 5 5 Suppose the base year for this price index is 2019. Between 2019 and 2020, the CSPI increased by 2019 1,400 100 110 1 3 120 5 5 2020 Cost (Dollars) In the last row of the table, calculate and enter the value of the CSPI for the remaining years. Price (Dollars) 11 140 1 4 150 5 5 %.…
- 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 by the using 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 An increase in the price of a German-made car that is popular among U.S. consumers A decrease in the price of a Treewood Equipment feller buncher, which is a commercial forestry machine made in the U.S. but not bought by U.S. consumers Grade It Now Save & Continue Continue without savingQuestion 4 (04.02 MC) Use the graph to answer the question that follows. Price P₁ P₂ P₂ H Q₁ M P₁, M, G, P3 in profits. P₁, M, G, P3 in losses P₁, M, N, P₂ in profits P1, M, N, P2 in losses P2, N, G, P3 in profits MR MC AC AR Quantity (units) What would be the area of this firm's economic profits or economic losses?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 An increase in the price of a German-made television that is popular among U.S. consumers. A decrease in the price of a Treewood Equipment feller buncher, which is a commercial forestry machine made in the U.S. but not bought by U.S. consumers
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