13Use the table below to calculate core and headline inflation in each time frame relative to the base year, assuming that each categoryis weighted equally in the calculation of headline inflation.Instructions: Round your answers to one decimal place. If you are entering any negative numbers be sure to include a negative sign (-)in front of those numbers.HeadlineCore inflationinflationOther goods(relative tothe base year(relative tothe base)Food andYearenergyand services201411610220181051072014-2018

*Answer: Core inflation = (102/100) -1 = 2% Headline inflation = [( 116/2+ 102/2) - 100] = 9%…

Answered: Headline Core inflation inflation Other…

Headline Core inflation inflation Other goods and services (relative to the base year (relative to the base) Food and Year energy 2014 116 102 2018 105 107 2014-2018

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

13
Use the table below to calculate core and headline inflation in each time frame relative to the base year, assuming that each category
is weighted equally in the calculation of headline inflation.
Instructions: Round your answers to one decimal place. If you are entering any negative numbers be sure to include a negative sign (-)
in front of those numbers.
Headline
Core inflation
inflation
Other goods
(relative to
the base year
(relative to
the base)
Food and
Year
energy
and services
2014
116
102
2018
105
107
2014-2018

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↑ Inflation Measure WPI Headline WPI Headline 1 WPI Food 0.34 WPI Core 0.82 CPI Headline 0.32 CPI Food 0.41 CPI Core -0.04 Inflation Measure WPI Headline WPI Food WPI Core CPI Headline CPI Food CPI Core WPI Headline 1 0.55 0.93 0.58" 0.34" 0.77" A: 1997 02-2008 04 WPI Food WPI Core CPI Headline CPI Food CPI Core 1 0.20 0.90 0.93 0.63 1 0.09 0.26 -0.32 B: 2009 01-2019 04 WPI Food WPI Core CPI Headline CPI Food CPI Core 1 0.27 0.91" 0.89 0.74* 1 0.39 0.10 0.67* Revisit Later 1 0.94 0.81 1 0.92* 0.86* 1 0.58 1 0.61* 1 1 Table 2: Correlation matrix of inflation measures (Please ignore the meaning of the * sign) Q. Based on Table 2, we can draw the conclusion that- Select an option & Clear Response The direction of movement between CPI core and WPI headline is not necessarily the same across the years Post 2008, WPI core and WPI headline have moved in opposite directions Prior to 2009, the correlation between WPI core and WPI headline has been very weak Post 2008, CPI core and WPI headline…
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