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6) a. The Consumer Price Index (CPI) is determined by     estimating the prices of goods and services in the economy at the same rate as the cost of living increases. comparing the value of a market basket of goods that consumers typically purchase to the value of the basket in cities around the country. averaging all the prices of goods and services in the economy. comparing the value of a market basket of goods that consumers typically purchase to the value of the basket in a base year.     b. The Bureau of Labor Statistics (BLS) would calculate the rate of inflation for year 5 by      adding the CPI of year 4 to the CPI of year 5, and then dividing by 2. adding the CPI of year 4 to the CPI of year 5, and then dividing by the average of year 4 and year 5. subtracting the CPI of year 4 from the CPI of year 5, and then dividing by the CPI of year 5. subtracting the CPI of year 4 from the CPI of year 5, and then dividing by the CPI of year 4.     c. Inflation     reduces the purchasing power of the dollar. reduces the export power of the dollar. lowers interest rates. increases the purchasing power of the dollar.

6) a. The Consumer Price Index (CPI) is determined by     estimating the prices of goods and services in the economy at the same rate as the cost of living increases. comparing the value of a market basket of goods that consumers typically purchase to the value of the basket in cities around the country. averaging all the prices of goods and services in the economy. comparing the value of a market basket of goods that consumers typically purchase to the value of the basket in a base year.     b. The Bureau of Labor Statistics (BLS) would calculate the rate of inflation for year 5 by      adding the CPI of year 4 to the CPI of year 5, and then dividing by 2. adding the CPI of year 4 to the CPI of year 5, and then dividing by the average of year 4 and year 5. subtracting the CPI of year 4 from the CPI of year 5, and then dividing by the CPI of year 5. subtracting the CPI of year 4 from the CPI of year 5, and then dividing by the CPI of year 4.     c. Inflation     reduces the purchasing power of the dollar. reduces the export power of the dollar. lowers interest rates. increases the purchasing power of the dollar.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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6)

a. The Consumer Price Index (CPI) is determined by

 

 

  • estimating the prices of goods and services in the economy at the same rate as the cost of living increases.
  • comparing the value of a market basket of goods that consumers typically purchase to the value of the basket in cities around the country.
  • averaging all the prices of goods and services in the economy.
  • comparing the value of a market basket of goods that consumers typically purchase to the value of the basket in a base year.

 

 

b. The Bureau of Labor Statistics (BLS) would calculate the rate of inflation for year 5 by 

 

 

  • adding the CPI of year 4 to the CPI of year 5, and then dividing by 2.
  • adding the CPI of year 4 to the CPI of year 5, and then dividing by the average of year 4 and year 5.
  • subtracting the CPI of year 4 from the CPI of year 5, and then dividing by the CPI of year 5.
  • subtracting the CPI of year 4 from the CPI of year 5, and then dividing by the CPI of year 4.

 

 

c. Inflation

 

 

  • reduces the purchasing power of the dollar.
  • reduces the export power of the dollar.
  • lowers interest rates.
  • increases the purchasing power of the dollar.

 

 

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