What was the growth rate of Nominal GDP between 2016 and 2017? Was the growth rate of real GDP higher or lower that the growth rate of nominal GDP? Explain. Using 2015 as the base year, calculate the CPI for each year. Year Price of t-Shirt Quantity of T-Shirt Price of Pajamas Quantity of Pajamas 2015 10 120 12 200 2016 12 300 15 200 2017 14 275 18 180

What was the growth rate of Nominal GDP between 2016 and 2017? Was the growth rate of real GDP higher or lower that the growth rate of nominal GDP? Explain. Using 2015 as the base year, calculate the CPI for each year. Year Price of t-Shirt Quantity of T-Shirt Price of Pajamas Quantity of Pajamas 2015 10 120 12 200 2016 12 300 15 200 2017 14 275 18 180

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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
Notebooks Calculators Large coffees Energy drinks Textbooks Total cost Price index Quantity in Basket 10 1 300 75 8 Price Cost (Dollars) (Dollars) 3 30 75 75 600 150 720 NN 90 Suppose the base year for this price index is 2017. Between 2017 and 2018, the CSPI increased by 2017 1,575 100 Price (Dollars) 3 80 2 4 110 2018 Cost (Dollars) In the last row of the table, calculate and enter the value of the CSPI for the remaining years. Price (Dollars) 4 104 2 5 120 % Between 2018 and 2019, the CSPI increased by 2019 Cost (Dollars) % Which of the following, if true, would illustrate why price indexes such as the CSPI might overstate inflation in the cost of going to college? Check all that apply. A new type of personal transporter, which made it easier to get around places like university campuses, became available for purchase. Professors required each student to buy 10 notebooks, regardless of the price. As the price of energy drinks increased relative to the price of coffee between 2017…
A Consumer Expenditure Survey in Sparta shows that people buy only juice and cloth. In 2015, the year of the Consumer Expenditure Survey and also the reference base year, the average household spent $27 on juice and $20 on cloth. The price of juice in 2015 was $3 a bottle, and the price of cloth was $5 a yard. In 2016, juice is $5 a bottle and cloth is $4 a yard. Calculate the CPI in 2016 and the inflation rate between 2015 and 2016. The CPI in 2016 is >>> Answer to 1 decimal place. The inflation rate between 2015 and 2016 is percent. >>> Answer to 1 decimal place. >>> If your answer is negative, include a minus sign. If your answer is positive, do not include a plus sign.
For the next question assume that consumers in an economy only purchase two products, tablets and sushi. The following table provides the quantities purchased in the base year, 2007, and prices in 2007 and 2018. Base Year Price Product Quantity (2007) 2018 Price Tablets 10 25 50 Sushi 40 10 15 The CPI in the base year is Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a 200 b 300 C 100 d 400
3. In the country below, only four items are produced, and all of the four are part of the CPI basket. C. e. Items Webcams Surgical masks Disinfectant wipes Dumbbells a. What is the nominal GDP growth rate between 2019-2020, and between 2020-2021? b. Given only the information you have, would real GDP growth be positive or negative between 2020 and 2021. Explain your answer. What is the CPI in each year if the base year is 2019? Assume all four items have the same weight in the CPI basket equal to one unit each d. Using the CPI as the price index, what is the inflation rate between 2019 and 2020? And between 2020-2021? f. 2019 2020 2021 Quantity | Price | Quantity Price | Quantity | Price 10 $20 15 $25 14 $22 100 $1 120 $3 110 $2 100 $5 $8 110 $7 10 $40 $50 10 $45 120 10 Without any calculation, would using the GDP deflator instead of CPI in (d) result in a higher or lower inflation rate? Explain your answer. What is the GDP deflator, how is it measured, and why is it considered a…
B. Consumer Price Indexes (CPI) are index numbers and are used to compare the evolution of prices over the years. The rate of change of the CPI is known as the inflation (or deflation) rate. The following table provides the CPI for two different base years (a) and (b). Complete the blanks in CPI (a) and CPI (b) by creating two spliced indexes: CPI (b) Year 2010 2011 2012 2013 2014 2015 CPI (a) (base 2006) 108.589 112.059 (base ) Inflation rate (a) Inflation rate (b) 100 102.446 103.889 103.732 103.213 Compute inflation rate in the economy (rate of change of CPI) by using both the index (a) and (b). Is there any difference in the results? _____since they CPI (a) and CPI (b) are showing. evolution of prices. Is there any year with deflation?
Which of the following statements about the CPI is true? How does the PCEPI differ from the CPI? The CPI _______. A. has a bias of approximately 2.0 percentage points a year B. is a measure of the change in the amount of money that people need to spend to achieve a given standard of living C. measures all the changes in the cost of living D. is a relatively useless measure because every year new goods become available and some old goods disappear The PCEPI _______. A. uses the same market basket as the CPI but gives a greater weight to sticky-price items B. introduces even more biases into the inflation rate than the CPI C. excludes the prices of food and energy D. uses the prices of goods and services included in the consumption expenditure component of GDP
6. The following table shows the CPI for each year from 2009 to 2021 Year CPI 2009 172 2010 177 2011 189 2012 200 2013 212 2014 220 2015 220 2016 230 2017 250 2018 255 2019 270 2020 280 2021 300 (a) In 2010, I deposited $380 in by interest bearing saving account. In 2021, in my account I had $412 expressed in 2013 prices. What is the average annual nominal interest rate I earned on my deposit from 2010-2021? (b) In another account, I deposited $1200 in an interest bearing saving account in 2008. I held the money in the account from 2008-2014. The annual real interest rate I earned on the account was r = 0. How much did I have in my account in 2014 (the nominal value)
Calculate the missing information in the table 1.1 taking into consideration that the base year is2015. Year Price of Books Quantity of Books Price of Socks Quantity of Socks Nominal GDP Real GDP GDP Deflator CPI 2015 10 120 12 200 3600 3600 100 2016 12 300 15 200 6600 5400 122.22 2017 14 275 18 180 7090 4910 144.40
Consider a simple economy that produces two goods: pencils and envelopes. The following table shows the prices and quantities of the goods over a three-year period. Price Year (Dollars per pencil) 2016 2 2017 4 2018 2 Year 2016 2017 2018 Pencils Use the information from the preceding table to fill in the following table. From 2017 to 2018, nominal GDP Quantity (Number of pencils) 125 135 125 The inflation rate in 2018 was Nominal GDP Real GDP (Dollars) (Base year 2016, dollars) GDP Deflator Price (Dollars per envelope) 3 3 3 and real GDP Envelopes Why is real GDP a more accurate measure of an economy's production than nominal GDP? Quantity (Number of envelopes) 155 O Real GDP includes the value of exports, but nominal GDP does not. Real GDP is not influenced by price changes, but nominal GDP is. Real GDP does not include the value of intermediate goods and services, but nominal GDP does. 210 165
A Consumer Expenditure Survey in Sparta shows that people buy only juice and cloth. In 2015, the year of the Consumer Expenditure Survey and also the reference base year, the average household spent $20 on juice and $12 on doth The price of juice in 2015 was $2 a bottle, and the price of doth was 54 a yard. In 2016, juice is $6 a bottle and cloth is $3 a yard Calculate the CPI in 2016 and the inflation rate between 2015 and 2016. The CPI in 2016 is >> Answer to 1 decimal place.
5 eBook The table below lists the CPI values for the United States from different decades. a. Complete the table by computing the annual inflation rate. Instructions: Round your answers to two decimal places. If entering a negative number include a minus sign. CPI Values and Inflation Year 1931 1932 1933 1946 1947 1948 1978 1979 1980 2001 2002 2003 CPI 15.8 14.0 13.3 20.1 23.2 24.7 67.8 74.7 85.4 181.9 183.6 191.4 Inflation Rate (percent) % Instructions: Enter the year using all four numbers (yyyy). b. Using the table above, indicate the year the economy experienced: The highest annual inflation rate: The largest annual negative inflation (deflation) rate: [ The most stable price level (annual inflation rate closest to zero): [