Question 4)below, data regarding typical household consumption are shown for three different years:2016, 2017 and 2018.Consider a simple economy in which there are only three products. In the table201620172018(BASE YEAR)PRODUCTQUANTITYPRICEPRICEPRICEHaircuts2$20.00$22.00$25.00Hamburgers104.004.204.50DVDS6.15.0015.0014.00a. Calculate the Consumer Price Index (CPI) in 2016, 2017 & 2018. Assume that 2016 isthe base yearb. Calculate the inflation rate in 2018Question 5) The paradox of inflation and cost of living.Even prior to the current pandemic and the consequent economic toll, Australianhouseholds were reportedly grappling with "rising costs of living". Households' budgetswere increasingly squeezed as costs rose significantly while income could not catch up.This, however, stands in stark contrast with the reported inflation rate. Inflation rate hasremained noticeably low, not exceeding 2.1% for every single quarter since 2015. Thisindicates only slight increases in prices.If inflation is indeed the measurement for changes in prices as it appears to, why haveAustralians faced a "cost of living" problem while the inflation rate has been verymodest?

$20.00 $22.00 4.20 Haircuts 2 $25.00 Hamburgers 10 4.00 4.50 DVDS 6 15.00 15.00 14.00 a. Calculate the Consumer Price Index (CPI) in 2016, 2017 & 2018. Assume that 2016 is the base year b. Calculate the inflation rate in 2018

$20.00 $22.00 4.20 Haircuts 2 $25.00 Hamburgers 10 4.00 4.50 DVDS 6 15.00 15.00 14.00 a. Calculate the Consumer Price Index (CPI) in 2016, 2017 & 2018. Assume that 2016 is the base year b. Calculate the inflation rate in 2018

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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