If we want to use a measure of inflation that foreshadows price changes before they affect prices at the retail level, we would base our measure of inflation on OA. the producer price index. OB. the consumer price index. OC. the GDP deflator. OD. the household price index.
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- Calculating and categorizing inflation This table indicates the historical level of the Consumer Price Index (CPI) for the United States for 2006,2007, and 2008. Complete the table by (1) selecting the inflation rates for 2007 and 2008, and (2) indicating for each year whether there has been inflation, deflation, or hyperinflation. Year CPI Inflation rate Change in Price Level 2006 201.6 2007 207.3 2007 215.3 What rates of inflation for 2009 would be consistent with disinflation between 2008 and 2009? Check all that apply. 13.9% 3.7% 3.9% 3.8% What rates of inflation for 2009 would be consistent with hyperinflation ? Check all that apply. 100.0 % -3.9% 120.0% 15.0%In 2019 and in 2020, consumers in Dexter purchased only books and pens. The prices and quantities for 2019 and 2020 are listed in the table. The reference base period for Dexter's CPI is 2019, and 2019 is also the year of the Consumer Expenditure Survey. What is the inflation rate in 2020? The inflation rate in 2020 is OA. 148.1 B. 2.1 C. 80.0 D. 48.1 percent. C Item Books Pens 2019 2020 Price Quantity Price Quantity $6 4 $5 8 $5 6 $10 5Does the CPI’s use of a representative basket of goods imply that the CPI will accurately measure the inflation rate of both someone who buys gasoline and someone who buys subway tickets? A. yes B. no
- 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…i)What is the current inflation rate as measured by the Consumer Price Index? You can use either the February or March 2022 figure. Describe the pattern of the Consumer Price Index since the beginning of 2020. Describe the pattern of the CPI since 2010. (Hint: Utilize Trading Economics (Links to an external site.) or FRED (Links to an external site.) to get the data. Please note that the inflation rate is not the same thing as the level of the CPI. The inflation rate is measured as the percentage change in the level of the CPI during a period of time.
- 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 answerUse the following data for 2019 to answer the question: Prices That Rose Health insurance Gasoline Lettuce (%) Prices That Fell +20.5 Televisions +12.8 Peanut butter +7.6 Oranges +5.9 Apples +4.2 Eggs +1.9 College textbooks +0.6 Coffee Average Inflation Rate: +2.3% Cigarettes Hot dogs College tuition Bananas (%) -20.8 -6.0 -5.5 -4.8 -4.6 -3.1 -1.4Consider a simple economy that only produces: pencils, t-shirts, and bananas. Using the information in the table below, calculate the inflation rate for 2020, as measured by the consumer price index. Product Pencils T-shirts Bananas 1.9% 1.1% O-1.1% 1.5% O-1.9% Quantity 8 15 5 Base year price (2010) $2 $5 $1 Price (2019) $3 $7 $1.50 Price (2020) $3.50 $6.75 $1.75
- Consider the effects of inflation in an economy composed of only two people: Larry, a bean farmer, and Megan, a rice farmer. Larry and Megan both always consume equal amounts of rice and beans. In 2016 the price of beans was $1, and the price of rice was $4. Suppose that in 2017 the price of beans was $2 and the price of rice was $8. Inflation was . Indicate whether Larry and Megan were better off, worse off, or unaffected by the changes in prices. Better Off Worse Off Unaffected Larry Megan Now suppose that in 2017 the price of beans was $2 and the price of rice was $4.80. In this case, inflation was . Indicate whether Larry and Megan were better off, worse off, or unaffected by the changes in prices. Better Off Worse Off Unaffected Larry Megan Now suppose that in 2017, the price of beans was $2 and the price of rice was $1.60. In this case,…Bob loans his sister-in-law $1000 so she can make her rent. She must pay it back after one year. If Bob charges her 6 percent interest and wants to get a real return (real interest) of 3.5 percent, Bob must anticipate that inflation will be___________ percent over the next year. (Carefully follow all numeric instructions. Enter your answer "as a percent, but without the percentage sign." In other words, if you think Bob predicts 99.99 percent inflation, just enter 99.99 in the blank.)A consequence of unanticipated inflation in an economy is that:Group of answer choices the rate of economic growth reaches a maximum. the risks of investing in a business increase. the level of productive activities in the economy increases. the allocation of resources in the economy becomes efficient.