A small nation of ten people idolizes the TV show Canadian Idol All that the ten peopleproduce and consume are karaoke machines and CDs, in the following amounts:Karaoke MachinesCDsQuantityPriceQuantityPrice201410$4030$10201512605012Use the consumer price index to compute the inflation rate. Use 2014 asthe base year and fix the basket at 2 karaoke machines and 3 CDs.一Use the GDP deflator to compute the 2015 inflation rate. Also use 2014as the base year.

1) Consumer price index measures the average prices of goods and services in the economy using a…

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The table below gives the CPI and the price of gasoline per gallon in the fictitious country "Alpha" between 2010 and 2015. For each year find the percent change in the price of gasoline from the previous year's price, the CPI inflation rate, and the change in the relative price of gasoline. Instructions: Enter your responses rounded to two decimal places for change in gasoline price and inflation, and one decimal place for percent values in the relative price change. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. Year 2010 2011 2012 2013 2014 2015 Gasoline price ($/gallon) $ 2.25 $ 2.35 $ 2.49 $ 2.60 $ 2.72 $ 2.86 Percent change in gasoline price 4.44 % 5.95 % 4.41 % 4.61 % 5.14 % CPI 2.25 2.28 2.34 2.38 2.42 2.70 Inflation % % % % % Change in relative price of gasoline % % % %
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Consider a fictional price index, the University Student Price Index (USPI), based on a typical university student's annual purchases. Suppose the following table shows information on the market basket for the USPI and the prices of each of the goods in 2016, 2017, and 2018. The cost of each item in the basket and the total cost of the basket are shown for 2016. Perform these same calculations for 2017 and 2018, and enter the results in the following table. 2016 2017 2018 Price (Dollars) Cost (Dollars) Price (Dollars) Cost (Dollars) Quantity in Basket Notebooks 10 3 30 3 Calculators 1 75 75 80 Large coffees 300 2 600 2 Energy drinks 75 2 150 4 Textbooks 8 90 720 110 Total cost 1,575 100 Price index Suppose the base year for this price index is 2016. In the last row of the table, calculate and enter the value of the USPI for the remaining years. Between 2016 and 2017, the USPI increased by %. Between 2017 and 2018, the USPI increased by % Which of the following, if true, would…
A Consumer Expenditure Survey in Sparta shows that people buy only juice and cloth. In 2015, the year of the Consumer Expenditure Survey and also the reference base year, the average household spent $27 on juice and $20 on cloth. The price of juice in 2015 was $3 a bottle, and the price of cloth was $5 a yard. In 2016, juice is $5 a bottle and cloth is $4 a yard. Calculate the CPI in 2016 and the inflation rate between 2015 and 2016. The CPI in 2016 is >>> Answer to 1 decimal place. The inflation rate between 2015 and 2016 is percent. >>> Answer to 1 decimal place. >>> If your answer is negative, include a minus sign. If your answer is positive, do not include a plus sign.
Suppose the only goods produced and consumed in an economy are food and clothing. The following table shows data on the quantities and prices of output in different years: fill in the table below- (2001 is the base year) Year Food (quantity) Price of Food Clothing (quantity) Price of clothing Nominal GDP Real GDP GDP Deflator Inflation 2000 200 $4 400 $6 2001 300 $5 500 $8
Refer to the following table. Suppose the CPI basket consists of 10 pies of pizza and 20 bottles of milk respectively, and 2020 is the base year. Year Price of pizza Price of milk 2020 $250 $40 2021 $280 $45 а. Calculate the CPI in 2020 and 2021 respectively. What is the inflation rate in 2021? b. Suppose the minimum wage is $37.5 per hour in 2020, how much would it be in 2021 in order to maintain the same purchasing power in 2020?. С. Which one do you think is a better measure of a household's cost of living, CPI or GDP deflator? Why?*
Consider a simple economy that produces two goods: pencils and envelopes. The following table shows the prices and quantities of the goods over a three-year period. Price Year (Dollars per pencil) 2016 2 2017 4 2018 2 Year 2016 2017 2018 Pencils Use the information from the preceding table to fill in the following table. From 2017 to 2018, nominal GDP Quantity (Number of pencils) 125 135 125 The inflation rate in 2018 was Nominal GDP Real GDP (Dollars) (Base year 2016, dollars) GDP Deflator Price (Dollars per envelope) 3 3 3 and real GDP Envelopes Why is real GDP a more accurate measure of an economy's production than nominal GDP? Quantity (Number of envelopes) 155 O Real GDP includes the value of exports, but nominal GDP does not. Real GDP is not influenced by price changes, but nominal GDP is. Real GDP does not include the value of intermediate goods and services, but nominal GDP does. 210 165
In a country, people use only three products (Milk, Apple and Bread) for consumption. A typical basket for the country contains 10 liters of milk, 5 kg of apples and 15 packs of bread. The Price in AED of these products are given in the below table. The base year is given as 2015. Find the consumer price index (CPI) and inflation for all the years? What are the shortcomings of CPI? Year Milk per liter Apple per KG Bread Per packet 2015 10 3 2 2016 10.5 3.5 2 2017 11.5 5 3 2018 12 6 4 2019 14 7 5 2020 16 8 5
A Consumer Expenditure Survey in Sparta shows that people buy only juice and cloth. In 2015, the year of the Consumer Expenditure Survey and also the reference base year, the average household spent $20 on juice and $12 on doth The price of juice in 2015 was $2 a bottle, and the price of doth was 54 a yard. In 2016, juice is $6 a bottle and cloth is $3 a yard Calculate the CPI in 2016 and the inflation rate between 2015 and 2016. The CPI in 2016 is >> Answer to 1 decimal place.

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