Suppose that over time, households used flash sale online retailers at an increasing rate. As a result the CPI is likely to be Select the correct answer below: O underestimated because households would buy products at lower prices than those collected by the U.S. Bureau of Labor Statistics underestimated because households would buy products at higher prices than those collected by the U.S. Bureau of Labor Statistics overestimated because households would buy products at lower prices than those collected by the U.S. Bureau of Labor Statistics overestimated because households would buy products at higher prices than those collected by the U.S. Bureau of Labor Statistics

Suppose that over time, households used flash sale online retailers at an increasing rate. As a result the CPI is likely to be Select the correct answer below: O underestimated because households would buy products at lower prices than those collected by the U.S. Bureau of Labor Statistics underestimated because households would buy products at higher prices than those collected by the U.S. Bureau of Labor Statistics overestimated because households would buy products at lower prices than those collected by the U.S. Bureau of Labor Statistics overestimated because households would buy products at higher prices than those collected by the U.S. Bureau of Labor Statistics

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter16: Measuring The Cost Of Living

Section: Chapter Questions

Problem 6PA

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Question 17 One problem with the CPI is the "substitution bias," which refers to consumers buying more of a good that has become cheaper and less of a good that has become more expensive. Assume that consumers consider Pepsi and Coke to be substitutes, so that when the price of Coke increases, consumers purchase less Coke and more Pepsi. When the CPI is calculated following the increase in the price of Coke, the substitution bias causes the CPI to O understate inflation since both the increase in the price of Coke and the increase in the amount of Pepsi purchased enter the CPI calculation O understate inflation since only the decrease in the price of Pepsi enters the CPI calculation O overstate inflation since both the increase in the price of Coke and the decrease in amount of Coke purchased enter the CPI calculation overstate inflation since only the increase in the price of Coke enters the CPI calculation
If the prices of Brazilian-made shoes imported in the US increase, then which of the following will occur? Both US GDP deflator and CPI will decrease. O US CPI will increase but the US GDP deflator will remain constant. O US GDP deflator will increase but the US CPI will remain constant. O Both US GDP deflator and CPI will increase.
Only typed answer and don't use chat gpt
n 2019 and in 2020, consumers in Dexter purchased only books and pens. The prices and quantities for 2019 and 2020 are listed in the table. The reference base period for Dexter's CPI is 2019 and 2019 is also the year of the Consumer Expenditure Survey. Calculate the CPI in 2020. The CPI in 2020 is O A. 104.0 B. 176.3 C. 56.7 D. 100.0
Mr. G says that “A 20% increase in the price of salt has a greater impact on the CPI than a 20% increase in the price of dark chocolate”. With proper reasoning state whether you agree with this statement or not.
The information on price and quantity of three products consumed by a typical household in the year 2020 and 2021 is given by the table below 2020 2021 Price Quantity Quantity 10 Price $5.50 Fish 12 $5 $10 Beef 5 $11 4 Train Ride $8 20 $9 22 Using 2020 as the base year, measure the CPI for 2021 and the inflation rate in 2021. Does this inflation rate correctly measure the cost of living changes for households in 2021? Explain. "The transfer payment does not have any effect on the gross domestic product of an economy". Discuss the validity of this statement.
By not taking into account the possibility of consumer substitution, the CPI O may overstate or understate the cost of living, depending on how quickly prices rise O understates the cost of living. O None of the other alternatives are correct O Overstates the cost of living
The table below gives the CPI and the price of gasoline per gallon in the fictitious country "Alpha" between 2010 and 2015. For each year find the percent change in the price of gasoline from the previous year's price, the CPI inflation rate, and the change in the relative price of gasoline. Instructions: Enter your responses rounded to two decimal places for change in gasoline price and inflation, and one decimal place for percent values in the relative price change. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. Year 2010 2011 2012 2013 2014 2015 Gasoline price ($/gallon) $ 2.25 $ 2.35 $ 2.49 $ 2.60 $ 2.72 $ 2.86 Percent change in gasoline price 4.44 % 5.95 % 4.41 % 4.61 % 5.14 % CPI 2.25 2.28 2.34 2.38 2.42 2.70 Inflation % % % % % Change in relative price of gasoline % % % %
Just cannot figure out how to calculate real price.
Indicate which one of the following events will affect CPI ONLY. Oa Saudi Arabia successfully developing a vaccine for Covid-19 which is used locally as well as exported to other countries. Ob. There is a decrease in the price of meat imported from Australia. Oc.There is an increase in the price of eggs produced in Saudi Arabia Od. People buying more imported goods without any change in prices O Saudi Arabia changes its base year to 2020
Which of the following was a way for the b ureauof labor statistics to reduce the qualitty/new good bias in its calcualtion of the cpi? a) automatically reduce the inflation by 0.5% to account for quality?new good bias. b)allow for some substitution amongst products. c) remove energy and food prices. d) update the list of products included in the cpi more often and rapidly.
A consumer has two goods in his consumption bundle: bread and coffee. The current price of bread is $4.00 per loaf and the price of coffee is $8.00 per cup. This consumer currently buys 10 loaves of bread per week and 5 cups of coffee. Suppose that the price of bread increases by 20% and the price of coffee increases by 20% (enter your Using this current consumption bundle, calculate the value of the CPI for this consumer. CPI = response rounded to two decimal places). By how much would a consumer's income need to change (in percentage terms) to compensate for these higher prices?% (enter your response as a percentage rounded to two decimal places).