Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN: 9781285165875
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 24, Problem 1QCMC
To determine
Equivalent ofConsumer Price Index.
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What does the CPI means?
a.
The gross domestic product
b.
The labor force participation rate
c.
The changes in the price level
d.
The level of unemployment in a country
Describe how the CPI is calculated. How might the CPI overstate the true increase in cost of living?
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.
Chapter 24 Solutions
Principles of Economics, 7th Edition (MindTap Course List)
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- Basket Items Unit $ per unit (2020) $ per unit (2021) $ per unit (2022) Cougar Tail 1 donut $5 $4.50 $4.25 Mint Brownie ½ sheet $29.98 $34.99 $39.99 Graham Canyon ice cream 5 quarts $14.99 $16.49 $17.99 Calculate the CPI for each year, using 2020 as the base year.arrow_forwardThe largest component in the basket of goods andservices used to compute the CPI isa. food and beverages.b. housing.c. medical care.d. apparel.arrow_forwardPrice (2011) Quantity (2012) $5.00 $6.00 Item Quantity (2011) Price (2012) Magazines 450 200 $4.50 $8.00 $10.50 400 Movie tickets 50 Pizzas 100 $10.00 120 The data in the table above shows the consumption by families in an economy. The year 2011 is the reference base period. Based on the table above, the CPI for 2012 is A. 105.1. B. 5.0 percent. C. 102.5. O D. 100. O E. 98.5.arrow_forward
- What is the Consumer Price Index (CPI)?arrow_forwardAn increase in the price of imported goods will show up in: Select one: a. the CPI but not in the GDP deflator. b. the GDP deflator but not in the CPI. c. both the CPI and the GDP deflator. d. neither the CPI nor the GDP deflator.arrow_forwardA painting from an Italian art gallery bought by a Canadian citizen a month ago, is considered when computing the current Canadian ________. An investment in some new machines, made by Roots, a publicly held Canadian brand, is taken into account when computing the current Canadian ________ but not the ________ Select one: a. CPI, GDP deflator, CPI b. GDP deflator, CPI, CPI c. CPI, CPI, GDP deflator d. GDP deflator, CPI, GDP deflatorarrow_forward
- In a simple economy, people consume only two goods: food and clothing. The market basket of goods used to compute the CPI has 50 units of food and 10 units of clothing. Food Clothing Last year's price $4 $8 This year's price $6 $16 a. What are the percentage increases in the price of food and in the price of clothing? b. What is the percentage increase in the CPI? c. Do these price changes affect all consumers to the same extent? Explainarrow_forwardUse your CPI Chart to calculate the numbers 2-4. 2. If you made $38,000 in 1997, how much money would you have to make in 2006 to maintain your real income? Explain.arrow_forwardExplain what is the difference between CPI and GDP deflator?arrow_forward
- In a simple economy, people consume only two goods: food and clothing. The market basket of goods used to compute the CPI has 40 units of food and 20 units of clothing. Food Clothing Last year's price $10 $ 18 This year's price $14 $21 a) What are the percentage increases in the price of food? Number b) What are the percentage increases in the price of clothing? Number c) What is the percentage increase in the CPI? Numberarrow_forwardhow to create a cpi chart?arrow_forwardA 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.arrow_forward
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