Bundle: Principles of Economics, Loose-leaf Version, 8th + LMS Integrated MindTap Economics, 2 terms (12 months) Printed Access Card
8th Edition
ISBN: 9781337607735
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 24, Problem 1QR
To determine
Effect on CPI .
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Which do you think has a greater effect on the CPI:a 10 percent increase in the price of chicken or a10 percent increase in the price of caviar? Why?
Over a long period of time, the price of a candybar rose from $0.20 to $1.20. Over the same period,the CPI rose from 150 to 300. Adjusted for overallinflation, how much did the price of the candy barchange?
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
Bundle: Principles of Economics, Loose-leaf Version, 8th + LMS Integrated MindTap Economics, 2 terms (12 months) Printed Access Card
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- Does an increase in the price of imported Belgian chocolate affect the CPI or the GDP deflator more? Whyarrow_forwardDoes an increase in the price of imported Frenchwine affect the CPI or the GDP deflator more? Why?arrow_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_forward
- Describe the three problems that make the CPI animperfect measure of the cost of living.arrow_forwardIn 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_forwardThe table shows the quantities of the goods Suzie bought and the prices she paid during two consecutive weeks. Suzie's CPI market basket contains the goods she bought in Week 1. Calculate the cost of Suzie's CPI market basket in Week 1 and in Week 2. What percentage of the CPI market basket is gasoline? Calculate the value of Suzie's CPI in Week 2 and her inflation rate in week 2. The cost of her CPI market basket in Week 2 is $ 95.75. >>> Answer to 2 decimal places. Gasoline is 36.3 percent of the CPI market basket. >>> Answer to 1 decimal place. Week 1 Item The cost of Suzie's CPI market basket in Week 1 is $ 103.25. >>> Answer to 2 decimal places. The value of Suzie's CPI in Week 2 is >>> Answer to 1 decimal place. Coffee Books Gasoline Week 2 Item Coffee Books Gasoline Concert Quantity 13 cups 1 15 gallons Quantity 13 cups 2 5 gallons 1 ticket Price $2.75 a cup $30.00 each $2.50 a gallon Price $2.75 a cup $15.00 each $3.00 a gallon $95 eacharrow_forward
- What is CPI? Define it and discuss why it is important.arrow_forwardSuppose you are a senior public servant writing a bill to index Social Security and pensions. That is your bill will adjust these benefits to offset changes in the cost of living. Will you use the GDP deflator or the CPI? Explainarrow_forwardAnswer in step by step with explanation. Don't use Ai and chatgpt.arrow_forward
- The table shows the quantities of the goods Suzie bought and the prices she paid during two consecutive weeks. Suzie's CPI market basket contains the goods she bought in Week 1. Calculate the cost of Suzie's CPI market basket in Week 1 and in Week 2. What percentage of the CPI market basket is gasoline? Calculate the value of Suzie's CPI in Week 2 and her inflation rate in week 2. The cost of Suzie's CPI market basket in Week 1 is $ >>> Answer to 2 decimal places. m Week 1 Item Coffee Books Gasoline Week 2 Item Coffee Books Gasoline Concert Quantity 8 cups 1 25 gallons Quantity 8 cups 4 15 gallons 1 ticket Price $4.00 a cup $25.00 each $2.00 a gallon Price $4.00 a cup $12.50 each $2.50 a gallon $95 eacharrow_forwardThe 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_forwardBased on surveys conducted by the BLS, the CPI basket assigns a weight of approximately 15% to transportation spending. Suppose you walk to your workplace every day and you do not use any other means of transportation. With everything else the same, if the price of transportation services increases by 10%, by how much would the CPI increase? Is the CPI measuring the true change in your cost of living?arrow_forward
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