What is the interpretation of a consumer price index (CPI) of 122 in year X? A bundle of goods in year X costs $22 more than in the base year. A bundle of goods in year X costs $122 more than in the previous year. A bundle of goods in year X costs 122% more than in the base year. A bundle of goods in year X costs 22% more than the previous year. A bundle of goods in year X costs 22% more than in the base year.

What is the interpretation of a consumer price index (CPI) of 122 in year X? A bundle of goods in year X costs $22 more than in the base year. A bundle of goods in year X costs $122 more than in the previous year. A bundle of goods in year X costs 122% more than in the base year. A bundle of goods in year X costs 22% more than the previous year. A bundle of goods in year X costs 22% more than in the base year.

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter5: National Income Accounting

Section: Chapter Questions

Problem 6E

See similar textbooks

Similar questions

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.
As a first step in computing the consumer price index (CPI), a survey of consumers is done to determine the “basket of goods” purchased by a typical consumer. Suppose that 2009 is given as the base year and, consistent with the data shown in the table above, it was decided that the basket of goods in this economy should consist of one unit of food and two units of clothing. I. Using 2009 as the base year,what is the CPI in each year: 2009, 2010, and 2011? ii. What is the inflation rate in 2010 and 2011?
As a result of a drought, prices and produced quantities in a country change as follows: Assume that the economy produces and consumes only the above agricultural products.a) Calculate the nominal GDP and the real GDP for the year 2021 with the base year 2020.b) By how many percent have the prices of goods increased?c) Calculate the CPI for the year 2021 according to Laspeyres and Paasche.d) Describe the general differences between the CPI and the GDP deflator.
The market basket used to calculate the CPI in Aquilonia is 4 loaves of bread, 6 gallons of milk, 2 shirts, and 2 pairs of pants. In 2005, 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 2006, bread cost $1.50 per loaf, milk cost $2.00 per gallon, shirts cost $7.00 each, and pants cost $12.00 per pair. Using 2005 as the base year, what was Aquilonia’s inflation rate in 2006? This question is stumping me. I thought that this answer was 124.4 but it seems that it is 24.4. I cant figure it out
In 2020, the value of the Consumer Price Index (CPI) in a certain country, Polonia, was 235 and median ( nominal) household income was $33,400. In 1950, the CPI was 89 and median (nominal) household income was $8,300. calculate median real household income in 1950, and in 2020, using 2020 as a base year
One difference between the CPI and the GDP deflator is CPI uses a fixed basket, Deflator uses current production quantities CPI use current production quantities, Deflator uses a fixed basket of goods CPI measures price changes for consumer goods only, GDP deflator measures price changes for producer goods only CPI excludes imported goods while the deflator does not
Two countries, Country N in North America and Country S in South America, have the same CPI basket. Year 2000 is the CPI base year for both countries. In that year, the cost of CPI basket in Country N is $N100, and in country S is $s1000, where $N and $s are their respective currencies. Twenty years later, in 2020, the CPI in Country N rose to 240, and in Country S to 360. a) In the ideal world in which the purchasing power parity (PPP) holds true, what should be the nominal exchange between $s and $N in Year 2000 and in Year 2020. Show calculations and explain the change in nominal exchange rate. b) Suppose in reality, the nominal exchange rage between the two currencies is 18 $s per $N in Year 2020. First, explain why the nominal exchange rate differs from your calculation above. Second, calculate the real exchange rate between the two countries, and explain the meaning of your calculated result. c) During Year 2021, the growth of the real GDP in the two countries are, 0% in country…
The GDP deflator for this year is calculated by dividing the using by the using and multiplying by 100. However, the CPI reflects only the prices of all goods and services
Please answer the following questions in the picture
Suppose a person's nominal income is $74,280 in the current year, and the CPI for the current year is 120. The person's current real income, in base year dollars, is: $61,900. $64,000. $78,412. $89,136.
The following table gives the CPI basket for 2000 and 2001. Suppose that 2000 is the reference base period: Item Quantity Price Price (2000) (2000) (2001) Oranges 50 $0.90 $0.75 Bananas 100 $0.50 $0.95 Chicken 200 $2.00 $2.50 Beef 100 $5.00 $4.80 Bread 300 $1.75 $2.00 a. What is the cost of the CPI basket in 2000? b. What is the cost of the CPI basket in 2001? c. What is the CPI for 200O?
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 was the inflation rate, as measured by the CPI, for Aquilonia between 2001 and 2002? a. 24.4 percent b. 21.6 percent c. It is impossible to determine without knowing the base year. d. 30 percent