Which of the following is required to construct a consumer price index? The choice of a base year in which prices are defined as 100. The creation of a representative basket of goods and services. The determination of the inflation rate. The calculation of changes in the level of consumption spending.

Which of the following is required to construct a consumer price index? The choice of a base year in which prices are defined as 100. The creation of a representative basket of goods and services. The determination of the inflation rate. The calculation of changes in the level of consumption spending.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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This table indicates the historical level of the Consumer Price Index (CPI) for the United States for 1921, 1922, and 1923. Complete the table by (1) selecting the inflation rates for 1922 and 1923, and (2) indicating for each year whether there has been inflation, deflation, or hyperinflation. Year CPI Inflation Rate Change in Price Level 1921 17.9 — — 1922 16.8 1923 17.1 What rates of inflation for 1924 would be consistent with disinflation between 1923 and 1924? Check all that apply. 1.7% 11.8% 51.8% 1.8% What rates of inflation for 1924 would be consistent with hyperinflation? Check all that apply. 15.0% -1.8% 100.0% 120.0%
In 2010 a market basket of goods and services costs $1,000. In 2011 the same market basket of goods and services costs $1,100, and in 2012 it costs $1,200. Using 2010 as the base year, what is the consumer price index in 2012? a)120 b)110 c) 109 d) none of the above
Please explain how the Consumer Price Index (CPI) is calculated and critically evaluate its merits as a measure 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.
Is the consumer price index a good measure of the general price increase of consumers? How?
Calculate the inflation rate using the GDP deflator based on the Laspeyres, Paasche, and chain- weighted indexes of GDP (use the approximate formula).
Which goods are supposed to be included in the CPI? Group of answer choices All goods and services that typical consumers buy. All goods and services produced in the economy. All goods and services in the consumption component (C) of the GDP. All the goods, but not the services, in the consumption component (C) of the GDP.
How can I find the Consumer Price Index
year 1974 nominal gdp is 2000, gdp deflator is 100, year 1975 nominal gdp is 3000 and gdp deflator is 120, year 1976 nominal gdp is 3750 and gdp deflator is 150, year 1977 nominal gdp is 6,000 and gdp deflator is 200. This economy experienced inflation from 1974 to 1975, from 1975 to 1976 to 1977.
The consumer price index: Group of answer choices uses a fixed market basket set in the base year for all subsequent years. measures changes in the prices of a market basket of some 50,000 goods and services. is adjusted annually for changes in consumer spending patterns. is also called the GDP price index.
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.
If nominal GDP is $690m and the price index is 110, then real GDP is $627.28m. $759m. $690m.