Question 4 Refer to the information provided in Table 22.6 below to answer the question(s) that follow. Good A Good B Good C Units Purchased 5 10 4 Table 22.6 2014 $1.00 $2.00 $4.00 Price per Unit in 2015 $1.50 $2.50 $4,50 2016 $1.50 $3.00 $5.00 a) What is the bundle price for the goods in period 2014? Show your calculation. b) Refer to Table 22.6. If 2014 is the base period, what is the price index in 2014? How do you know? What is the price index in 2015? Show any calculations you used to determine this. c) Refer to Table 22.6. If 2014 is the base year, what was the inflation rate between 2014 and 2015? Show your calculation/ d) Refer to Table 22.6. If 2015 is the base year, what is the inflation rate between 2015 and 2016? Show your calculations. e) How is the market basket of goods definited (this is like choosing Good A, B, and C in Table 22.6)? Why is this a good definition for aggregating overall price levels? What is one criticism of the selection of the market basket?

Question 4 Refer to the information provided in Table 22.6 below to answer the question(s) that follow. Good A Good B Good C Units Purchased 5 10 4 Table 22.6 2014 $1.00 $2.00 $4.00 Price per Unit in 2015 $1.50 $2.50 $4,50 2016 $1.50 $3.00 $5.00 a) What is the bundle price for the goods in period 2014? Show your calculation. b) Refer to Table 22.6. If 2014 is the base period, what is the price index in 2014? How do you know? What is the price index in 2015? Show any calculations you used to determine this. c) Refer to Table 22.6. If 2014 is the base year, what was the inflation rate between 2014 and 2015? Show your calculation/ d) Refer to Table 22.6. If 2015 is the base year, what is the inflation rate between 2015 and 2016? Show your calculations. e) How is the market basket of goods definited (this is like choosing Good A, B, and C in Table 22.6)? Why is this a good definition for aggregating overall price levels? What is one criticism of the selection of the market basket?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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