# CPI and Inflation Practice Problems #1## Fill in blanks in table below### Market Basket Items and Costs| Market Basket Items | # of Units | Year 1 (2000) | Year 2 (2003) | Year 3 (2006) ||---------------------|------------|---------------|---------------|---------------|| | | $ per unit Total Cost | $ per unit Total Cost | $ per unit Total Cost || Cheese | 2 lbs | $1.75 $3.50 | $1.50 ___ | $1.50 ___ || Blue Jeans | 2 pairs | $12.00 ___ | $15.50 ___ | $20.00 ___ || Gasoline | 10 gallons | $1.25 ___ | $1.60 ___ | $2.70 ___ || **Total Cost of Basket** | | $ ___ | $ ___ | $ ___ |## Instructions- Using Year 1 as our base year, calculate the index for each year using the given costs.## Index Calculations1. **Year 1 Index** = (base year)2. **Year 2 Index** = 3. **Year 3 Index** = Complete the table and use the formula for the Consumer Price Index (CPI) to analyze inflation over the given years.

These problems could be solved by using the following formula: Total Cost = $ per unit × # of…

CPI and Inflation Practice Problems #1 Fill in blanks in table below Market Basket Items Cheese Blue Jeans Gasoline Total Cost of Basket # of Units Year 2 Index = 2 lbs Year 3 Index = 2 pairs 10 gallons Year 1 Index = (base year) Using year 1 as our base year, using the formula above to calculate the index for each year: Year 1 (2000) $ per unit Total Cost $1.75 $3.50 $12.00 $ $1.25 $ Year 2 (2003) $ per unit Total Cost $1.50 $ $15.50 $ $1.60 $ Year 3 (2006) $ per unit Total Cost $1.50 $ $20.00 $2.70 $ $ 113

CPI and Inflation Practice Problems #1 Fill in blanks in table below Market Basket Items Cheese Blue Jeans Gasoline Total Cost of Basket # of Units Year 2 Index = 2 lbs Year 3 Index = 2 pairs 10 gallons Year 1 Index = (base year) Using year 1 as our base year, using the formula above to calculate the index for each year: Year 1 (2000) $ per unit Total Cost $1.75 $3.50 $12.00 $ $1.25 $ Year 2 (2003) $ per unit Total Cost $1.50 $ $15.50 $ $1.60 $ Year 3 (2006) $ per unit Total Cost $1.50 $ $20.00 $2.70 $ $ 113

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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