CPI (consumer price index) and PCE (personal consumption expenditures) are used to gauge inflation. However, they differ in several ways, to include data sources and frequency. In addition, A) PCE is more comprehensive and includes all goods and services consumed in the U.S. whether they are purchased by consumers, or by employers or federal programs on behalf of consumers B) CPI uses fixed weights generated from a basket of goods that is updated every two years C) CPI is a portion of PCE and is used to adjust tax brackets and certain benefits D) A and B E) All of the above

CPI (consumer price index) and PCE (personal consumption expenditures) are used to gauge inflation. However, they differ in several ways, to include data sources and frequency. In addition, A) PCE is more comprehensive and includes all goods and services consumed in the U.S. whether they are purchased by consumers, or by employers or federal programs on behalf of consumers B) CPI uses fixed weights generated from a basket of goods that is updated every two years C) CPI is a portion of PCE and is used to adjust tax brackets and certain benefits D) A and B E) All of the above

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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In the first Super Bowl in early 1967, the winners earned prize money of $15,000. In January of 1967, the CPI was 32.9. In January of 2018, the CPI was 247.87. Earning $15,000 in 1967 would have been like earning how much in 2018 (using our CPI numbers to do the conversion)? Group of answer choices a) $15,000 b) approximately $113,011 c) approximately $95,717 d) approximately $110,717 e) approximately $114.78
Last year the jones family earned $40,000. This year their income is $42,000. If the inflation rate was 10%, did the jones family experience an increase/decrease/no change in their Normal income? Did the jones family experience an increase/decrease/no change in the real income ?
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Two countries, Country N in North America and Country S in South America, have the same CPI basket. Year 2000 is the CPI base year for both countries. In that year, the cost of CPI basket in Country N is $N100, and in country S is $s1000, where $N and $s are their respective currencies. Twenty years later, in 2020, the CPI in Country N rose to 240, and in Country S to 360. a) In the ideal world in which the purchasing power parity (PPP) holds true, what should be the nominal exchange between $s and $N in Year 2000 and in Year 2020. Show calculations and explain the change in nominal exchange rate. b) Suppose in reality, the nominal exchange rage between the two currencies is 18 $s per $N in Year 2020. First, explain why the nominal exchange rate differs from your calculation above. Second, calculate the real exchange rate between the two countries, and explain the meaning of your calculated result. c) During Year 2021, the growth of the real GDP in the two countries are, 0% in country…
compare and contrast the calculations for the consumer price index and the GDP price index as measures of inflation.
The base year is 2010. If the CPI today is 199, what does this mean about consumer prices? A) They have increased by 199% since 2010 B) They have increased by 99% since 2010 C) They have decreased by 199% since 2010. D) They have decreased by 99% since 2010
Suppose the current CPI is 252 and in 2005 it was 196. A pair of Levi’s jeans costs $43 today. Based on the CPIs, what would you expect the 2005 price to have been for the same style of Levis, in a similar retail outlet?
This table gives the monthly purchases of an average consumer in a small economy. Suppose 1977 is the reference base period unless stated otherwise. Item Quantity (1977) Clementines Burritos Bags of trail mix 90 Price (1977) 30 $0.10 $2.00 10 $1.00 $2.00 Find the total cost of the market basket for 1977 and 1978. Price (1978) What is the CPI in 1977 and 1978? $0.15 $2.25 Use the CPIs calculated in part b to find the inflation rate between 1977 and 1978. Recalculate the CPIs using 1978 as the base year. How does the inflation rate change?
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Ten years ago, Ginny inherited $50,000 from her grandmother. She decided to invest all of this money in GE stock. Suppose she decides to sell the stock today so she can purchase her first home. The sale price of the stock is $64,500. Suppose that at the beginning of the ten year period the Consumer Price Index (CPI) was 125 and today the CPI is 215. Use this information to determine the difference between the initial investment in today's dollars and the sale price.
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