The island nation of Coronia subsists entirely on pancakes and syrup. That is, they produce and consume only pancakes and syrup in the following amounts: Pancake Mix (cases) Maple Syrup (gallons) Quantity Price Quantity Price 2019 16 5 8 30 2020 48 6 10 50 (a) Using a method like the CPI, compute the CPI in 2019 and 2020 and percentage change in the overall price level from 2019 to 2020 (inflation rate). Use 2019 as the base year and fix the market basket at 4 pancakes and 2 syrups. (b) Using a method like the GDP deflator, compute the GDP deflator in 2019 and 2020 and percentage change in the overall price level from 2019 to 2020 (inflation rate). Use 2019 as the base year. (c) Is there a difference in the inflation rate using the two methods? Explain why or why not.
The island nation of Coronia subsists entirely on pancakes and syrup. That is, they produce and consume only pancakes and syrup in the following amounts:
|
|
Pancake Mix (cases) |
Maple Syrup (gallons) |
||
|
|
Quantity |
|
Quantity |
Price |
|
2019 |
16 |
5 |
8 |
30 |
|
2020 |
48 |
6 |
10 |
50 |
(a) Using a method like the
(b) Using a method like the
(c) Is there a difference in the inflation rate using the two methods? Explain why or why not.
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