The first two columns of the table below describe the goods and quantities included in your currentmonthly consumption. Suppose you have been able to use all of your monthly income (no savings) toafford this level of fixed consumption over the last few years despite the increase in the cost of living.• Round all expenditure calculations to the nearest dollar.• Round CPI and inflation (expressed as an integer) to 1 decimal place.• Carry your rounded figures throughout the rest of the problem.201820192020BasketPricesPricesItemPricesQuantitiesMeal Kit Delivery$106.008$107.00 $110.25$48.25$50.00$46.00$53.00Water16Hydro Electricity14$56.90$58.75Dry cleaning$62.0010$64.75$68.00Entertainment$26.0017$28.75$32.80Part (a): Using the quantities specified in the 2018 basket of goods, calculate the CPI for 2018, 2019 and2020.Part (b): What is the inflation rate between 2018 and 2019? 2019 and 2020?Part (c): Suppose inflation is expected to remain constant for future years. At the end of December 2020,your boss offers you the opportunity to start a new position in January 2021 that pays a monthly salary of$3,947.92 and increases by 5.5% every year.Should you leave your current job and accept the new offer? Use 1- 2 sentences to explain your answer.

e table below describe the goods and quantities included in your current pose you have been able to use all of your monthly income (no savings) to nsumption over the last few years despite the increase in the cost of living. calculations to the nearest dollar. (expressed as an integer) to 1 decimal place. ures throughout the rest of the problem. 2018 2019 2020 Basket Prices Prices Prices Quantities $106.00 8. $107.00 $110.25 $46.00 16 $48.25 $50.00 $53.00 14 $56.90 $58.75 $62.00 10 $64.75 $68.00 $26.00 17 $28.75 $32.80 es specified in the 2018 basket of goods, calculate the CPI for 2018, 2019 and on rate between 2018 and 2019? 2019 and 2020? is expected to remain constant for future years. At the end of December 2020,

e table below describe the goods and quantities included in your current pose you have been able to use all of your monthly income (no savings) to nsumption over the last few years despite the increase in the cost of living. calculations to the nearest dollar. (expressed as an integer) to 1 decimal place. ures throughout the rest of the problem. 2018 2019 2020 Basket Prices Prices Prices Quantities $106.00 8. $107.00 $110.25 $46.00 16 $48.25 $50.00 $53.00 14 $56.90 $58.75 $62.00 10 $64.75 $68.00 $26.00 17 $28.75 $32.80 es specified in the 2018 basket of goods, calculate the CPI for 2018, 2019 and on rate between 2018 and 2019? 2019 and 2020? is expected to remain constant for future years. At the end of December 2020,

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter22: Inflation

Section: Chapter Questions

Problem 7SCQ: Go to this website (http://www.measuringworth.com/ppowerus/) for the Purchasing Power Calculator at...

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Congratulations! Your boss has given you a raise. However, you want to know whether your purchasing power has increased, since inflation is also rising. The table below gives you data for wages and the Consumer Price Index (CPI) for the last two years. Wage ($/day) CPI Year 1 $ 2000 CPI 120 Year 2 $2200 CPI 129.6 The nominal percentage increase in your wage is enter your response here%. (Round your answer to one decimal place.) Part 2 The real percentage increase in your wage is enter your response here%. (Round your answer to one decimal place.)
Suppose Dalia is a sports fan and buys only football tickets. Dalia deposits $2,000 into a savings account that pays an annual nominal interest rate of 20%. Assume this interest rate is fixed, and so it will not change over time. On the day she makes her deposit, suppose that a football ticket has a price of $20.00. Initially, Dalia's $2,000 deposit has a purchasing power of football tickets. For each of the annual inflation rates given in the following table, first determine the new price of a football ticket, assuming it rises at the rate of inflation. Then enter the corresponding purchasing power of Dalia's deposit after one year in the first row of the table for each inflation rate. Finally, enter the value for the real interest rate at each of the given inflation rates. Hint: Round your answers in the first row down to the nearest football ticket. For example, if you find that the deposit will cover 20.7 football tickets, you would round the purchasing power down to 20 football…
Suppose Dalia is a sports fan and buys only football tickets. Dalia deposits $4,000 into a savings account that pays an annual nominal interest rate of 5%. Assume this interest rate is fixed, and so it will not change over time. On the day she makes her deposit, suppose that a football ticket has a price of $10.00. Initially, Dalia's $4,000 deposit has a purchasing power of football tickets. For each of the annual inflation rates given in the following table, first determine the new price of a football ticket, assuming it rises at the rate of inflation. Then enter the corresponding purchasing power of Dalla's deposit after one year in the first row of the table for each inflation rate. Finally, enter the value for the real interest rate at each of the given inflation rates. Hint: Round your answers in the first row down to the nearest football ticket. For example, if you find that the deposit will cover 20.7 football tickets, you would round the purchasing power down to 20 football…
A) Inflation is the steady and widespread increase in prices. The inflation rate, measured by CPI, rose .1% in May (since April) and rose a total of 4% year-over-year (May 2022 to May 2023). Read the BLS report on the Consumer Price Index and identify an “item” or “all items” and begin to consider why the price increased. Do a news search or using (clear, logical, rational) reasoningexplain whether prices are increasing because demand increased or because supply decreased. Graph and explain your answer
Now you see what the BLS economist do, except with a more complex basket of goods. Now try to construct an index and determine the inflation rate on your own. The table shows the prices of fruit purchased by the typical college student from 2001 to 2004. What is the amount spent each year on the “basket” of fruit with the quantities shown in column 2? (5 points) Items Qty. 2001 2002 2003 2004 Price Amount Spent Price Amount Spent Price Amount Spent Price Amount Spent Apples 10 $0.50 $0.75 $0.85 $0.88 Bananas 12 $0.20 $0.25 $0.25 $0.29 Grapes 2 $0.65 $0.70 $0.90 $0.95 Raspberries 1 $2.00 1.9 2.05 2.13 $2.13 Total Construct the price index for a “fruit basket” in each year using 2003 as the base year. (5 points) Compute the inflation rate…
Optimizing economic agents use the real interest rate when thinking about the economic costs and returns of a loan. Suppose the average rate paid by banks on savings accounts is 0.75% at a time when inflation is around 1.65%. For the average saver, the real rate of interest on his or her savings is .......???%. (Round your response to two decimal places and use a minus sign if necessary.) If banks expect that the rate of inflation in the coming year will be 4.65% and they want a real return of 7.5% on a certain category of loans, then the nominal rate they should charge borrowers on those loans is .......???%. (Round your response to two decimal places.) If the economy experiences an unexpectedly low rate of inflation, the group that would tend to benefit is ___________. A. debtors (people or businesses who owe money). B. creditors (people or institutions that are owed money). C. both would benefit equally. D. neither benefits.
ASAP
Congratulations! Your boss has given you a raise. However, you want to know whether your purchasing power has actually increased, since inflation is rising as well. The table below gives you data for wages and the Consumer Price Index (CPI) for the last two years. Year 1 Year 2 Wage ($/day) $2,000 $2,100 The nominal percentage increase in your wage is%. (Round your answer to one decimal place.) The real percentage increase in your wage is%. (Round your answer to one decimal place.) CPI 115 128.8
Problem 3: Again, consider the country of Opalia that produces two goods: footballs and basketballs. Below is a table showing prices and quantities of common consumer purchases for the past three years: Price of Footballs Price of Basketballs Qd Footballs Qd Basketballs Year Year 1 10 12 33 4 Year 2 12 4 15 Year 3 18 14 a) Compute the CPI index (using year 1 as the base). b) Compute the inflation rate. c) Compare the answer to part b) and the answer you found for problem 1, part d)? What is the origin of the difference?
5. Calculate the one-year real rate of interest faced by the U.S. government given that expected inflation is now 1.68%/year (Source: FRB-Cleveland) and the nominal one- year U.S. Treasury rate is 0.15% (Source: Investing.com).
Suppose the price level reflects the number of dollars needed to buy a basket of goods containing one cup of coffee, one donut, and one newspaper. In year one, the basket costs $9.00. In year two, the price of the same basket is $8.00. From year one to year two, there is (a. inflation, b. deflation) at an annual rate of ___ %. In year one, $72.00 will buy ____ baskets, and in year two, $72.00 will buy ____ baskets. This example illustrates that, as the price level falls, the value of money (a. rises, b. falls, c. remains the same).
Suppose that Annie's real income this year is $150 and next year it will be $100. Assume that the real interest rate is 10%. How much can Annie consume this year if she borrows against all of her income next year? Round to the nearest whole dollar, type without units (e.g. 10).