calculate the overall price change (inflation) given the category changes and the appropriate weights below for 2008-2009 Price ChangeCategoryWeight2008-2009ProductFood154%60Housing3%0.Аpparel15-1.5%-22.5Trans251.2%30Medical4.8%24Recreation10-0.4%-4Education152.7%40.5Other152.6%39Total100

Answered: Price Change Category Weight 2008-2009…

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

calculate the overall price change (inflation) given the category changes and the appropriate weights below for 2008-2009

Price Change
Category
Weight
2008-2009
Product
Food
15
4%
60
Housing
3%
0.
Аpparel
15
-1.5%
-22.5
Trans
25
1.2%
30
Medical
4.8%
24
Recreation
10
-0.4%
-4
Education
15
2.7%
40.5
Other
15
2.6%
39
Total
100

Expert Solution

Step 1

The percentage change in a price index is used to calculate the inflation rate (such as CPI or the GDP deflator). The inflation rate indicates how much the price level changes from one period to the next. The Consumer Price Index (CPI) tracks how much money a consumer needs to maintain their quality of living over time. The Consumer Price Index (CPI) is designed to represent increases in the cost of living for a typical metropolitan family.