ECNS 202 PRINTOUT
8th Edition
ISBN: 9781337096584
Author: Mankiw
Publisher: CENGAGE L
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Question
Chapter 11, Problem 1PA
To determine
Buying power based on CPI .
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Consumers of the economy purchase all primary products, manufacturing products and services shown in the table. Manufacturing products and services are all produced by the domestic economy. However, for each year, 3/4 of the primary products is imported, and 1/4 is produced domestically. Set 1973 as the base year.Find the % change in prices for primary products, manufacturing products and services, respectively, from 1973 to 1974.
Find the CPI for both years. Calculate the corresponding inflation rate from 1973 to 1974.
Find the nominal and real GDP for both years. Hence, find the GDP deflator for both years. Calculate the corresponding inflation rate from 1973 to 1974.
The above table is set up in such a way to mimic the actual data of the inflation rates calculated from the CPI and the GDP deflator, respectively, for the US during the first oil crisis in 1973- 1974. Use your results to explain how and why the two numbers differ by such a wide margin during that period.
"The cost of an average ticket to a baseball game in 1955 was $2.19. In 2010, the
average price of a baseball ticket was $29.61. If the ticket price in 1955 rose at the
same rate as inflation, what is the difference in prices between the 1955 ticket price
(in 2010 dollars) and the actual ticket price in 2010? Enter your answer as a positive
number.
Refer to the instructions in the quiz for a link to the CPI table to answer this question."
The weight of the item such as food or housing will determine the effect of price changes on CPI
TRUE
FALSE
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