One of the problems of using the CPI is that it Multiple Choice has difficulty adjusting for the improved quality of products in the market basket. only includes the prices of goods purchased by businesses. adjusts for the introduction of new products too quickly. All of these choices are correct.

One of the problems of using the CPI is that it Multiple Choice has difficulty adjusting for the improved quality of products in the market basket. only includes the prices of goods purchased by businesses. adjusts for the introduction of new products too quickly. All of these choices are correct.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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In a simple economy, people consume only two goods: food and clothing. The market basket of goods used to compute the CPI has 40 units of food and 20 units of clothing. Food Clothing Last year's price $10 $ 18 This year's price $14 $21 a) What are the percentage increases in the price of food? Number b) What are the percentage increases in the price of clothing? Number c) What is the percentage increase in the CPI? Number
Use the following information to calculate the inflation rate (one decimal point) for 2020. CPI index 2019: 112.7 CPI index 2020: 117.7
One criticism of the CPI is that the market basket used in the CPI may not reflect current spending priorities. Which of the following is an example of this? Personal computers were less powerful in 1982-1984. Cell phones are more commonly purchased today than in 1993-1995. Using extreme couponing methods, a family can save hundreds of dollars a month. Goods cost more in Alaska and Hawaii due to transportation costs.
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
What does the CPI in the base year equal? Explain your answer.
The base year is 2010. If the CPI today is 199, what does this mean about consumer prices? A) They have increased by 199% since 2010 B) They have increased by 99% since 2010 C) They have decreased by 199% since 2010. D) They have decreased by 99% since 2010
Suppose the current CPI is 252 and in 2005 it was 196. A pair of Levi’s jeans costs $43 today. Based on the CPIs, what would you expect the 2005 price to have been for the same style of Levis, in a similar retail outlet?
Name Owner File size Location 5. In December 2023, the CPI-U for all items was 306.746. Five years earlier, in December 2018, the CPI-U was 251.233. What was the percentage increase in the CPI-U during those five years?
Suppose you earned $100,000 in a given year. Calculate your real income, assuming the CPI is 200 for that year.
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?
How does the CPI compare the cost of the typical market basket of goods and services?
One difference between the CPI and the GDP deflator is CPI uses a fixed basket, Deflator uses current production quantities CPI use current production quantities, Deflator uses a fixed basket of goods CPI measures price changes for consumer goods only, GDP deflator measures price changes for producer goods only CPI excludes imported goods while the deflator does not