Principles of Economics (Second Edition)
2nd Edition
ISBN: 9780393614077
Author: coppock, Lee; Mateer, Dirk
Publisher: W. W. Norton & Company
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Chapter 21, Problem 2QFR
To determine
To explain:
The three issues that are at the center of the debate regarding the accuracy of the
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What three issues are at the center of the debate regarding the accuracy of the CPI? Give an example of each issue.
How does the BLS calculate the CPI? How is CPI related to inflation? What is the average percentage change in CPI over the past year?
Over a long period of time the CPI rose from 100 to 150. What does a CPI of 150 mean? If the price of imported vegetables rises, between the CPI and the GDP deflator, which one of the two will be affected more? Explain.
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Principles of Economics (Second Edition)
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- lwk I K The following table shows the top 10 films of all time through January 2021, measured by box office receipts in the United States, as well as several other notable films farther down the list. The CPI in 2020 was 259. Use this information and the data in the table to calculate the box office receipts for each film in 2020 dollars. Assume that each film generated all of its box office receipts during the year it was released. Use your results to prepare a new list of the top 10 films, based on their earnings in 2020 dollars. (Some of the films, such as the first Star Wars film, Gone with the Wind, and Snow White and the Seven Dwarfs, were re-released several times, so their receipts were actually eamed during several different years, but we will ignore that complication.) Fill in the real value of box office receipts in the table below. (Enter your responses rounded to one decimal place.) Rank 1 2 3 4 5 6 7 8 9 10 18 Part 1 of 2 19 23 117 214 244 397 Film Star Wars: Episode…arrow_forwardexplain four main differences between the GDP Deflator and CPI, with one example for each difference.arrow_forwardHow has CPI changed over time?arrow_forward
- Use the information in the table to calculate a consumer price index (CPI) and the inflation rate. The base year is 1975. Round answers to two decimal places. Market basket Quantity 1975 prices 1976 prices A dozen eggs 29 $1.10 $1.70 Calculator 19 $15.00 $17.00 Microwave oven 9 $180.00 $230.00 What is the CPI for 1975?arrow_forwardDescribe how the CPI is calculated. How might the CPI overstate the true increase in cost of living?arrow_forwardThe table below shows some data I got from FRED on the CPI and PCE deflator. The PCE deflator is a price index similar to the GDP deflator but only uses the consumption ("personal consumption expenditures") part of the GDP data. Year CPI PCE deflator 1989 123.94 60.69 2001 177.04 79.74 2020 258.84 111.15 You were probably born around 2001 so calculate the annualized inflation rate based on the CPI between 2001 and 2020. Repeat to find the annualized inflation using the PCE deflator between 2001 and 2020. The gives a higher inflation rate O PCE, and its noticeably higher (over 0.5 percentage points) PCE, but its not that different from the CPI inflation rate (difference is under 0.5 percentage points) CPI, and its noticeably higher (over 0.5 percentage points) CPI, but its not that different from the CPI inflation rate (difference is under 0.5 percentage points)arrow_forward
- The table shows the cost of a fixed basket of goods that a typical urban consumer would buy in the economy of Kindleberger. The base period for the consumer price index (CPI) is the year 2000. Please specify answers to two decimal places. Year Cost of a basket of goods 2000 $5,150.00 2011 $4,500.00 2012 $7,725.00 What is the CPI for 2000? CPI for 2000: What is the CPI for 2011? CPI for 2011: What is the CPI for 2012? CPI for 2012:arrow_forwardWhich 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 GDParrow_forwardUse the information in the table to calculate a consumer price index (CPI) and the inflation rate. The base year is 1975. Rou answers to two decimal places. Market basket Quantity 1975 prices 1976 prices A dozen eggs 29 $1.10 $1.70 Calculator 19 $15.00 $17.00 Microwave oven 9. $180.00 $230.00 What is the CPI for 1975? 100 What is the CPI for 1976? 126.82 What is the inflation rate for 1976? Enter numeric value Incorrectarrow_forward
- Use the information in the table to calculate a consumer price index (CPI) and the inflation rate. The base year is 1975. Round answer to two decimal places. Market basket Quantity 1975 prices 1976 prices A dozen eggs 21 $0.50 $0.90 Calculator 11 $10.50 $14.00 Microwave oven 2 $130.00 $150.00 What is the CPI for 1975? What is the CPI for 1976? What is the inflation rate for 1976?arrow_forwardSuppose the current CPI is 252 and in 2005 it was 196. A pair of Levi's jeans costs $43 today. Based on the CPIs, what would you expect the 2005 price to have been for the same style of Levis, in a similar retail outlet? Round your answer to two decimal places. 0 $ Click or tap the numbers or use your keyboard to type. If you're not sure, just take a guess. 1 2 3 4 5 6 7 8 9 Donearrow_forward
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