EBK ESSENTIALS OF ECONOMICS
8th Edition
ISBN: 8220103599832
Author: Mankiw
Publisher: Cengage Learning US
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Question
Chapter 16, Problem 8PA
Subpart (a):
To determine
Social security of elderly consumer.
Subpart (b):
To determine
Explain what would determine elderly consumer better-off.
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Explain using consumer theory why microeconomists believe the traditional CPI is biased. A diagram would help.
Congratulations! Your boss has given you a raise.
However, you want to know whether your purchasing power has increased, since inflation is also rising. The table below gives you data for wages and the Consumer Price Index (CPI) for the last two years.
Wage ($/day)
CPI
Year 1
$ 2000 CPI 120
Year 2
$2200 CPI 129.6
The nominal percentage increase in your wage is
enter your response here%. (Round your answer to one decimal place.)
Part 2
The real percentage increase in your wage is
enter your response here%. (Round your answer to one decimal place.)
What three issues are at the center of the debate regarding the accuracy of the CPI? Give an example of each issue.
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