In the city of Paradise, government survey takers determine that typical family expenditures each month in the year designated as the base year are as follows: 20 pizzas at $10 each Rent of apartment, $600 per month Gasoline and car maintenance, $100 Phone service, $50 In the year following the base year, the survey taker determine that pizzas have risen to $11 each, apartment rent is $640, gasoline and maintenance has risen to $120, and phone service has dropped in price to $40. a). Find the CPI in the subsequent year and the rate of inflation between the base year and the subsequent year. b). The family's nominal income rose by 5% between the base year and the subsequent year. Is the family worse off or better off in terms of what its income is about to buy?
In the city of Paradise, government survey takers determine that typical family expenditures each month in the year designated as the base year are as follows:
20 pizzas at $10 each
Rent of apartment, $600 per month
Gasoline and car maintenance, $100
Phone service, $50
In the year following the base year, the survey taker determine that pizzas have risen to $11 each, apartment rent is $640, gasoline and maintenance has risen to $120, and phone service has dropped in price to $40.
a). Find the CPI in the subsequent year and the rate of inflation between the base year and the subsequent year.
b). The family's nominal income rose by 5% between the base year and the subsequent year. Is the family worse off or better off in terms of what its income is about to buy?
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