The good that receives the largest weight in the CPI is the good that a) has experienced the greatest price increase. b) consumers spend the largest fraction of their income on c) has the highest price. d) consumers buy most frequently.

The good that receives the largest weight in the CPI is the good that a) has experienced the greatest price increase. b) consumers spend the largest fraction of their income on c) has the highest price. d) consumers buy most frequently.

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 2CQQ

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Insurance and pensions 11.9% Item a. Entertainment b. Transportation c. Clothing Housing 32.8% Entertainment 5.3% Source: U.S. Bureau of Labor Statistics, Consumer Expenditure Survey (2018 data). 0.053 0.159 0.03 Transportation 15.9% Health care 8.1% Use the item weights in the figure to determine the percentage change in the CPI that would result from a(n) a. 20 percent increase in entertainment prices. b. 8 percent decrease in transportation costs. c. doubling of clothing prices. (Note: Review the table titled "Computing Changes in the CPI" in your text for assistance.) Instructions: Enter your responses as a percentage rounded to two decimal places. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. Item Weight Price Change (Inflation Effect) Impact on CPI 20% -8% 100% Food 12.9% Clothing 3.0% Miscellaneous 10.1%
Refer to the figure below. Insurance and pensions 11.9% Item a. Entertainment b. Transportation c. Clothing Housing 32.8% Source: U.S. Bureau of Labor Statistics, Consumer Expenditure Survey (2018 date). Entertainment 5,3% Item Weight 0.053 0.159 0.03 Transportation 15.9% Health care 8.1% Use the item weights in the figure to determine the percentage change in the CPI that would result from a(n) a. 20 percent increase in entertainment prices. b. 8 percent decrease in transportation costs. c. doubling of clothing prices. (Note: Review the table titled "Computing Changes in the CPI" in your text for assistance.) Instructions: Enter your responses as a percentage rounded to two decimal places. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. Price Change 20% -8% 100% Food 12.9% Clothing 3.0% Impact on CPI (Inflation Effect) Miscellaneous 10.1%
An employee asks her boss whether she can transfer offices, so that she can work in a different part of the country. The boss responds positively and says that the employee can choose to work in Cleveland, Miami, or New York City. The boss then hands the employee a list, as shown in the table below, of the salaries that she would earn in the different cities and the average price levels in those same cities. Office location Cleveland Miami Salary ($) CPI New York City 80,000 120,000 150,000 100 155 210 a. From the standpoint of maximizing the employee's consumption possibilities, she should choose (Click to select) Instructions: Round your answer to the nearest whole number. ✓ b. The minimum salary in New York City the boss could offer the employee to make her indifferent between moving to Cleveland or New York City is $
The consumer price index (CPI) a. is the price of metals, lumber, and raw materials. b. is a quarterly index that producers receive for their finished goods. c. is a monthly index that tracks the prices paid by consumers. d. measures prices paid during periods of deflation. e. measures increases or decreases in the level of worker performance.
your rate may vary. a) suppose a student in 2007 estimated that her expenses were distributed among the CPI categories as listed in Table 5.6. (She had no housing expenses since she lived at home.) Calculate the inflation rate she would have experienced relative to the year before. b) compare the answer in (a) to the northeast urban average of 2.58% and explain why the rate the student experienced was higher or lower.
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7) In 2010, a bottle of Coke cost $1. In 2020, it would cost $1.50. The CPI for 2020 was 260 and the CPI for 2010 was 220. Which of the following statements is correct? A) The real price of Coke stayed the same. B) The real price of Coke decreased. C) The real price of Coke increased. D) The nominal price of Coke stayed the same.
Andrew is offered a job in Calgary where the CPI is 130 and a job in Toronto where the CPI is 180. Andrew’s job offer in Calgary is for $65,000. Which salary would the Toronto job have to pay so that both jobs have the same purchasing power? a) $52,000 b) $60,266 c) $65,625 d) $90,000
Commodity substitution bias _______ when the CPI is calculated in 2021 using the 2020 market basket because _______. A. exists; over time preferences change and people prefer to eat pizza rather than pasta B. does not exist; pizza and pasta are not substitutes C. exists; people switch from the relatively more expensive pasta to the relatively less expensive pizza D. does not exist; the CPI market basket is updated frequently to eliminate substitution bias
In a simple economy, people consume only two goods: food and clothing. The market basket of goods used to compute the CPI has 50 units of food and 10 units of clothing. Food Clothing Last year's price $4 $8 This year's price $6 $16 a. What are the percentage increases in the price of food and in the price of clothing? b. What is the percentage increase in the CPI? c. Do these price changes affect all consumers to the same extent? Explain
The table shows the quantities of the goods Suzie bought and the prices she paid during two consecutive weeks. Week 1 Suzie's CPI market basket contains the goods she bought in Week 1. Item Quantity 14 cups Price Coffee $2.50 a cup Calculate the cost of Suzie's CPI market basket in Week 1 and in Week 2. Books 1 $30.00 each Gasoline 30 gallons $1.75 a gallon Week 2 What percentage of the CPI market basket is gasoline? Item Quantity Price $2.50 a cup Calculate the value of Suzie's CPI in Week 2 and her inflation rate in week 2. Coffee 14 cups Books 4 $15.00 each $2.25 a gallon Gasoline 20 gallons Concert 1 tícket $95 each The cost of Suzie's CPI market basket in Week 1 is $. >>> Answer to 2 decimal places. Check Ans Enter your answer in the answer box and then click Check Answer. Clear All 4 parts remaining DD DII F11 F10 F9 F8 F7 80 F6 F5 F4 F3 F2 esc F1 & 24 7 8. ! 4 5 1 2 T Y K # 3