Suppose that federal spending in a country was $340 million in Year 1, $400 million in Year 2, and $410 million in Year 3. Also, assume that the consumer price index (CPI) was 30 in Year 1, 31.2 in Year 2, and 34.4 in Year 3. a. Complete the table below by converting the given nominal dollar values to Year 3 dollars (these dollar amounts represent real federal spending). Period Year 1 Year 2 Year 3 Nominal dollar amount (millions) 340 400 410 CPI Inflation rate 7.0825% (between Year 1 and Year 3) N/A Real spending (millions, in Year 3 dollars) $410

Suppose that federal spending in a country was $340 million in Year 1, $400 million in Year 2, and $410 million in Year 3. Also, assume that the consumer price index (CPI) was 30 in Year 1, 31.2 in Year 2, and 34.4 in Year 3. a. Complete the table below by converting the given nominal dollar values to Year 3 dollars (these dollar amounts represent real federal spending). Period Year 1 Year 2 Year 3 Nominal dollar amount (millions) 340 400 410 CPI Inflation rate 7.0825% (between Year 1 and Year 3) N/A Real spending (millions, in Year 3 dollars) $410

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The monthly market basket for consumers consists of pizza, t-shirts, and rent. The table below shows market basket quantities and prices for the base year (Year 1) and in the following year. Base Year (Year 1) Quantity 15 In Year 1, the CPI for the economy is In Year 2, the CPI for this economy is Product Pizza T-Shirts Rent 4 1 (Round both answers to one decimal place.) Price in the Base Year $2.00 $10.00 $500.00 Price in Year 2 $2.50 $9.00 $550.00
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