b. The following table shows the price index of various sub-index of CPI in May 2014 and May 2015: 1 2 4 5 8 Item Food Housing Electricity, gas and water Alcohol and tobacco Clothing and footwear Durable goods Miscellaneous goods Transport Miscellaneous services Price Indices in Price Indices in May 2014 May 2015 173.4 158.4 135.7 138.4 110.5 118.4 119.7 136.3 113.8 128.4 156.2 133.3 118.5 109.4 120.5 128.6 134.1 125.9 i. Compute the inflation rate of each item in the table. ii. If your family income is relatively low, do you better of for worse off in May 2015? Explain why.

b. The following table shows the price index of various sub-index of CPI in May 2014 and May 2015: 1 2 4 5 8 Item Food Housing Electricity, gas and water Alcohol and tobacco Clothing and footwear Durable goods Miscellaneous goods Transport Miscellaneous services Price Indices in Price Indices in May 2014 May 2015 173.4 158.4 135.7 138.4 110.5 118.4 119.7 136.3 113.8 128.4 156.2 133.3 118.5 109.4 120.5 128.6 134.1 125.9 i. Compute the inflation rate of each item in the table. ii. If your family income is relatively low, do you better of for worse off in May 2015? Explain why.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose in the year 2010, consumers bought 100 baskets of food at the price of $50 each, and 100 baskets of clothing at the price of $75 each. In the year 2011, consumers bought 110 baskets of food at the price of $60 each, and 120 baskets of clothing at the price of $85 each.Let 2010 be the base year. What is the CPI for 2011? Question 12Answer a. 110 b. 134.4 c. 146.2 d. 116
Please describe how inflation is measured using the Consumer Price Index (CPI).
5
AP Macro
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