If the price of other components of the CPI remain the same, did the rise in foodprices during COVID-19 make the CPI underestimate or overestimate the rise in thecost of living of low-income households?With rising food prices,the CPIweight on food than itsthe rise in the cost of living of low-incomehouseholds because the CPI market basket places aweight in a low-income budget.

1The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by…

Answered: If the price of other components of the…

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 29 Suppose manufacturers introduce a new model car to replace a car currently included in the CPI basket. The price of the new car is 10 percent higher than the discontinued model, but the new car also includes additional safety features. In this situation the CPI will tend to inflation as a result of bias. A. understate; substitution B. overstate; substitution C. overstate; quality adjustment understate; quality adjustment D.
The price of a serving of McDonald's French fries in 1950 was 10¢. For simplicity, assume the price of a serving of McDonald's French fries today is $1.62, the CPI for 1950 is 23.5 and the CPI for today is 240.5. In terms of today's dollars, the real price of McDonald's French fries in 1950 was $ (Enter your response rounded to two decimal places.) Therefore in this example, the real price of McDonald's French fries has since 1950.
The reference base period for the CPI is 1982 – 1984. In April 2020, the CPI was 256.4 . What can we conclude from this information? The CPI in April 2020 tells us that the _______ of the prices paid by urban consumers for a fixed basket of consumer goods and services was _______. A. inflation rate; 156.4 percent per year B. inflation rate; 256.4 percent per year C. average; 256.4 percent higher in April 2020 than the average of 1982 – 1984 D. average; 156.4 percent higher in April 2020 than the average of 1982 – 1984
The table below shows the prices a household must pay for goods they purchase regularly. Year Price of Bread Price of Peanut Butter Price of Milk 1 $2.00 $3.50 $4.10 2 2.25 3.65 4.15 3 2.40 3.70 4.18 Suppose the yearly consumption of the household 50 loaves of bread, 84 jars of peanut butter, and 25 gallons of milk. What is CPI in year 2, using year 1 as a base year? Multiple Choice The CPI is 105.31. The CPI is 107.81. The CPI is 522.85. The CPI is 1.05
When calculating price indices like the GDP deflator and the CPI, we multiply the ratio by 100. Why? Neither statement is true. Statement a: We multiply by 100 to put things into percentage terms. Statement b: We multiply by 100 to normalize the base year to 100. Both statements are true.
Use the following table to answer the question. The table shows the prices and the quantities consumed in Vegetarian Country. Suppose the base year is 2020. Also, suppose that 2020 is the year the typical consumption basket was determined, so the quantities consumed in 2020 are the only quantities needed to calculate the CPI in each year. Year Price of Carrots Quantity of Carrots Price of Celery Quantity of Celery 2020 $2.00 100 $1.00 100 2021 2.50 90 0.90 120 2022 2.75 105 1.00 130 What are the values of the CPI in 2020, 2021, and 2022, respectively? a. 2020: 100; 2021: 111; 2022: 139.6 b. 2020: 100; 2021: 109.2; 2022: 116 c. 2020: 100; 2021: 113.3; 2022: 125 d. 2020: 83.5; 2021: 94.2; 2022: 100 e. None of the answer choices are correct.
Suppose in the year 2010, consumers bought 100 baskets of food at the price of $50 each, and 100 baskets of clothing at the price of $75 each. In the year 2011, consumers bought 110 baskets of food at the price of $60 each, and 120 baskets of clothing at the price of $85 each.Let 2010 be the base year. What is the CPI for 2011? Question 12Answer a. 110 b. 134.4 c. 146.2 d. 116
Economists in the Statistics Bureau decide to check the CPI substitution bias. To do so, they conduct a Consumer Expenditure Survey in both 2018 and 2019. The table shows the results of the survey. It shows the items that consumers buy and their prices. 2018 2019 Item Quantity Price Quantity Price The Statistics Bureau fixes the reference base year as 2018. Burgers 30 $1 35 $1 Chicken 35 $4 25 $6 Calculate the CPI in 2019 if the CPI basket contains the 2019 quantities. The CPI in 2019 if the CPI basket contains the 2019 quantities is >>> Answer to 1 decimal place. Question Viewer Enter your answer in the answer box. MacBook Air DII DD F11 F10 000 000 888 F9 80 F7 F8 F6 F5 F4 F3 esc F2 F1 & % ! @ 6 7 8 2 3 4 5 1 | P Y U Q W E R tab K 云 00 %24
The table shows the quantities of the goods Suzie bought and the prices she paid during two consecutive weeks. Suzie's CPI market basket contains the goods she bought in Week 1. Calculate the cost of Suzie's CPI market basket in Week 1 and in Week 2. What percentage of the CPI market basket is gasoline? Calculate the value of Suzie's CPI in Week 2 and her inflation rate in week 2. The cost of Suzie's CPI market basket in Week 1 is $ >>> Answer to 2 decimal places. m Week 1 Item Coffee Books Gasoline Week 2 Item Coffee Books Gasoline Concert Quantity 8 cups 1 25 gallons Quantity 8 cups 4 15 gallons 1 ticket Price $4.00 a cup $25.00 each $2.00 a gallon Price $4.00 a cup $12.50 each $2.50 a gallon $95 each
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?
Suppose the Consumer Price Index in 2016 is 127.1 with 2002 as the base year a) What is the purchasing power of the dollar compared to 2002 b) What is the real income relative to 2002 of person whose income was $72500
Hanna, who is a 5-year-old girl, eats nothing but pasta, yogurt, and lemonade. Each month her parents buy 27 pounds of pasta, 69 packages of yogurt, and 17 bottles of lemonade. These three items make up a basket of goods and services similar to the much larger basket used by the Bureau of Labor Statistics (BLS) when computing the official Consumer Price Index (CPI). The table below lists the average price for each item in this basket for the past four years. Hanna's Meals Pasta (dollars Yogurt (dollars per Lemonade (dollars per Year per pound) $1.86 1.99 package) bottle) $1.04 $2.22 1.11 2.38 2.13 1.19 2.55 2.73 4 2.28 1.27 Instructions: Round your answers to 2 decimal places. a. For each year, calculate the CPI, using year 1 as the base year. In year 1, the CPI was In year 2, the CPI was In year 3, the CPI was In year 4, the CPI was b. For each year, calculate the CPI, using year 3 as the base year. In year 1, the CPI was In year 2, the CPI was In year 3, the CPI was In year 4, the…

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