Answered: "Consumer Price IndexGiven the…

Name: "Consumer Price IndexGiven the following data, what was the value of t
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Description: "Consumer Price IndexGiven the following data, what was the value of the consumer price index in the base year? Calculate the annual rate of consumer price inflation in 2015 in each of the following situations:a.The CPI equals 200 in 2014 and 240 in

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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"Consumer Price IndexGiven the following data, what was the value of the consumer price index in the base year? Calculate the annual rate of consumer price inflation in 2015 in each of the following situations:a.The CPI equals 200 in 2014 and 240 in 2015.b.The CPI equals 150 in 2014 and 175 in 2015.c.The CPI equals 325 in 2014 and 340 in 2015.d.The CPI equals 325 in 2014 and 315 in 2015."

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The inflation rate, which describes how general prices fluctuate over the previous year, is estimated by the relative change in the value of consumer price index (CPI) over the last year. Mathematically, it has the following expression:

$I n f l a t i o n r a t e = \frac{(C P I_{C u r r e n t Y e a r} - C P I_{L a s t Y e a r}) \times 100}{C P I_{L a s t Y e a r}}$

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