The market basket used to calculate the CPI in Aquilonia is 4 loaves of bread, 6 gallons of milk, 2 shirts and 2 pants. In 2001 bread cost $1.00 per loaf, milk cost $1.50 per gallon,shirts cost $6.00 each and pants cost $10.00 per pair. In 2002 bread cost $1.50 per loaf, milk cost $2.00 per gallon, shirts cost $7.00 each and pants cost $12.00 per pair. What wasthe inflation rate, as measured by the CPI, for Aquilonia between 2001 and 2002?O a. It is impossible to determine without knowing the base year.O b. 21.6 percentO C 24.4 percentd. 30 percentWhich of the following statements is correct?O a. GDP at factor cost = Net price increase + direct taxO b. GDP at factor cost = Net Value Addition + DepreciationO c.GDP at factor cost = Net price increase + indirect taxO d. GDP at factor cost = Net Value Addition - Depreciation

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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9. In 2015, republican presidential candidate Donald Trump made the statement, "It has not been easy for me. It has not been easy for me. I started off in Brooklyn. My father gave me a small loan of a million dollars". Donald Trump obtained this "small loan" in 1968. In 1968 the Consumer Price Index (CPI) was 34.8. As of May 2019, the CPI was 256.092. If that "small loan" was adjusted to May 2019 dollars, how much did Donald Trump get (in 2019's currency)?
Price (2011) Quantity (2012) $5.00 $6.00 Item Quantity (2011) Price (2012) Magazines 450 200 $4.50 $8.00 $10.50 400 Movie tickets 50 Pizzas 100 $10.00 120 The data in the table above shows the consumption by families in an economy. The year 2011 is the reference base period. Based on the table above, the CPI for 2012 is A. 105.1. B. 5.0 percent. C. 102.5. O D. 100. O E. 98.5.
The table below shows the prices a household must pay for goods they purchase regularly. Year Price of Bread Price of Peanut Butter Price of Milk 1 $2.00 $3.50 $4.10 2 2.25 3.65 4.15 3 2.40 3.70 4.18 Suppose the yearly consumption of the household 60 loaves of bread, 97 jars of peanut butter, and 41 gallons of milk. What is CPI in year 3, using year 1 as a base year? Multiple Choice The CPI is 1.07. The CPI is 659.20. The CPI is 105.04. The CPI is 107.44
The table below presents some data on the federal minimum wage and the CPI for several years. Fill in the column for “minimum wage in 2020 $s." Year Minimum wage CPI Minimum wage in 2020 $s 1949 $0.40 23.8 1968 $1.60 34.8 1995 $4.25 152.4 2020 $7.25 259.1 2024 (proposed) $15 306 (projected) What was the 1949 minimum wage equivalent to in 2020 $s?
Suppose, in the base year, a typical market basket purchased by an urban family costs $250. In Year 1, the same market basket cost $950. What is the consumer price index (CPI) for Year 1? If the same market basket costs $1000 in Year 2, what is the CPI for Year 2? What was the Year 2 rate of inflation?
One criticism of the CPI is that the market basket used in the CPI may not reflect current spending priorities. Which of the following is an example of this? Personal computers were less powerful in 1982-1984. Cell phones are more commonly purchased today than in 1993-1995. Using extreme couponing methods, a family can save hundreds of dollars a month. Goods cost more in Alaska and Hawaii due to transportation costs.
The price of a serving of McDonald's French fries in 1950 was 10¢. For simplicity, assume the price of a serving of McDonald's French fries today is $1.62, the CPI for 1950 is 23.5 and the CPI for today is 240.5. In terms of today's dollars, the real price of McDonald's French fries in 1950 was $ (Enter your response rounded to two decimal places.) Therefore in this example, the real price of McDonald's French fries has since 1950.
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. Product Base Year (Year 1) Quantity Price in the Base Year Price in Year 2 Pizza 25 $2.00 $2.50 T-Shirts 4 $10.00 $9.00 Rent 1 $450.00 $495.00 In Year 1, the CPI for the economy is nothing. (Round both answers to one decimal place.) In Year 2, the CPI for this economy is nothing.
The table below shows the prices a household must pay for goods they purchase regularly. Year Price of Bread Price of Peanut Butter Price of Milk 1 $2.00 $3.50 $4.10 2 2.25 3.65 4.15 3 2.40 3.70 4.18 Suppose the yearly consumption of the household 50 loaves of bread, 84 jars of peanut butter, and 25 gallons of milk. What is CPI in year 2, using year 1 as a base year? Multiple Choice The CPI is 105.31. The CPI is 107.81. The CPI is 522.85. The CPI is 1.05
Use the following table to answer the question. The table shows the prices and the quantities consumed in Vegetarian Country. Suppose the base year is 2020. Also, suppose that 2020 is the year the typical consumption basket was determined, so the quantities consumed in 2020 are the only quantities needed to calculate the CPI in each year. Year Price of Carrots Quantity of Carrots Price of Celery Quantity of Celery 2020 $2.00 100 $1.00 100 2021 2.50 90 0.90 120 2022 2.75 105 1.00 130 What are the values of the CPI in 2020, 2021, and 2022, respectively? a. 2020: 100; 2021: 111; 2022: 139.6 b. 2020: 100; 2021: 109.2; 2022: 116 c. 2020: 100; 2021: 113.3; 2022: 125 d. 2020: 83.5; 2021: 94.2; 2022: 100 e. None of the answer choices are correct.
In each of the following cases, explain clearly how the CPI might misrepresent changes in consumer prices (Commodity substitution bias, Introduction of new goods, or Un-measured quality changes). In each case, speculate as to whether CPI overstates or understates consumer expenses. (a) By 1990, expensive personal computers became a common expenditure in consumer baskets. However, some governments were still calculating the consumer’s basket using a 1975 survey. (b) Between 2007 and 2015, there were significant improvements in smartphones. (c) Compared to 1970, households in 2015 took more vacations. (d) Food quality has deteriorated over time, even as consumers purchase the same amount.
Suppose the current CPI is 252 and in 2005 it was 196. A pair of Levi’s jeans costs $43 today. Based on the CPIs, what would you expect the 2005 price to have been for the same style of Levis, in a similar retail outlet?

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