**Consumer Price Index Calculation Over Three Years****Problem Statement:**Suppose that the yearly inflation rates for 2020, 2021, and 2022 are 20%, 25%, and 20% respectively. If the Consumer Price Index (CPI) is 220 TL at the beginning of 2020, what will it be after 3 years?**Explanation:**To find the CPI after 3 years, we need to adjust the initial CPI value based on the given yearly inflation rates. Here is the step-by-step calculation:1. **Initial CPI (2020) = 220 TL**2. **For 2020:** - Inflation Rate: 20% - New CPI = Initial CPI * (1 + Inflation Rate) - New CPI for 2020 = 220 TL * (1 + 0.20) = 220 TL * 1.20 = 264 TL3. **For 2021:** - Inflation Rate: 25% - New CPI = CPI at end of 2020 * (1 + Inflation Rate) - New CPI for 2021 = 264 TL * (1 + 0.25) = 264 TL * 1.25 = 330 TL4. **For 2022:** - Inflation Rate: 20% - New CPI = CPI at end of 2021 * (1 + Inflation Rate) - New CPI for 2022 = 330 TL * (1 + 0.20) = 330 TL * 1.20 = 396 TL**Result:**The Consumer Price Index (CPI) after 3 years will be **396 TL**.

CPI is the measure of the aggregate price level in the economy CPI after 3 years would be =…

Answered: Suppose that yearly inflation for 2020,…

Suppose that yearly inflation for 2020, 2021 and 2022 are 20%, 25% and 20% respectively. If the consumer price index (CPI) is 220TL at the beginning of 2020, what will it be after 3 years?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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