QUESTION 7Suppose a basket of goods and services has been selected to calculate the CPI and 2012 has been selected as the base year. In 2012, the basket's cost was $308; in2013, the basket's cost was $328; and in 2014, the basket's cost was $360. The value of the CPI in 2014 wasa.109.8 and the inflation rate was 9.8%.b.116.9 and the inflation rate was 16.9%.C.164 and the inflation rate was 16.9%.d.116.9 and the inflation rate was 9.8%.aCQUESTION 8When computing the cost of the basket of goods and services purchased by a typical consumer, which of the following changes from year to year?the quantities of the goods and services purchasedthe prices of the goods and servicesthe goods and services making up the basketa.b.С.d.All of the above are correct.aCboO O OO O A steel company sells some steel to a bicycle company for $140. The bicycle company uses the steel to produce a bicycle, which it sells for $240. Taken together,these two transactions contributea.$140 to GDP.b.$240 to GDP.between $240 and $380 to GDP, depending on the profit earned by the bicycle company when it sold the bicycle.C.d.$380 to GDP.ad.QUESTION 4One bag of flour is sold for $4.00 to a bakery, which uses the flour to bake bread that is sold for $8.00 to consumers. A second bag of flour is sold for $4.00 to agrocery store who sells it to a consumer for $5. Taking these four transactions into account, what is the effect on GDP?a.GDP increases by $21.b.GDP increases by $5.C.GDP increases by $8.d.GDP increases by $13.aSave All AnswersClick Saue and Submit to save and submit. Click Save All Answers to save all answers.C.

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Suppose a basket of goods and services has been selected to calculate the CPI and 2012 has been selected as the base year. In 2012, the basket's cost was $308; in 2013, the basket's cost was $328; and in 2014, the basket's cost was $360. The value of the CPI in 2014 was a. 109.8 and the inflation rate was 9.8%. b. 116.9 and the inflation rate was 16,9%. C. 164 and the inflation rate was 16.9%. d. 116.9 and the inflation rate was 9.8%.

Suppose a basket of goods and services has been selected to calculate the CPI and 2012 has been selected as the base year. In 2012, the basket's cost was $308; in 2013, the basket's cost was $328; and in 2014, the basket's cost was $360. The value of the CPI in 2014 was a. 109.8 and the inflation rate was 9.8%. b. 116.9 and the inflation rate was 16,9%. C. 164 and the inflation rate was 16.9%. d. 116.9 and the inflation rate was 9.8%.

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter7: Unemployment And Inflation

Section: Chapter Questions

Problem 7E

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Similar questions

Describe a situation, either a government policy situation, an economic problem, or a private sector situation, where using the CPI to convert from nominal to real would be more appropriate man using the GDP deflate:
The total price of purchasing a basket of goods in the United Kingdom over four years is: year 1=940, year 2=970, year 3=1000, and year 4=1070. Calculate two price indices, one using year 1 as the base year (set equal to 100) and the other using year 4 as the base year (set equal to 100). Then, calculate the inflation rate based on the first price index. If you had used the other price index, would you get a different inflation rate? If you are unsure, do the calculation and find out.
The index number representing the price level changes from 110 to 115 in one year and then from 115 to 120 the next year. Since the index number increases by five each year, is five inflation rate each year? Is the inflation rate the same each year? Explain your answer.
Describe a situation, either a government policy situation, an economic problem, or a private sector situation, where using the GDP deflator to convert from nominal to real would be more appropriate than using the CPI.