Macroeconomics (Book Only)
12th Edition
ISBN: 9781285738314
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 6, Problem 2VQP
To determine
Estimate the value of real income.
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Suppose a person's nominal income is $74,280 in the current year, and the CPI for the current year is
120. The person's current real income, in base year dollars, is:
$61,900.
$64,000.
$78,412.
$89,136.
Describe how the CPI is calculated. How might the CPI overstate the true increase in cost of living?
Suppose 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
$
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Chapter 6 Solutions
Macroeconomics (Book Only)
Ch. 6.1 - Prob. 1STCh. 6.1 - Prob. 2STCh. 6.1 - In year 1, your annual income is 45,000 and the...Ch. 6.2 - Prob. 1STCh. 6.2 - Prob. 2STCh. 6 - Prob. 1VQPCh. 6 - Prob. 2VQPCh. 6 - Prob. 3VQPCh. 6 - Prob. 4VQPCh. 6 - Prob. 5VQP
Ch. 6 - Prob. 1QPCh. 6 - Prob. 2QPCh. 6 - Prob. 3QPCh. 6 - Prob. 4QPCh. 6 - Prob. 5QPCh. 6 - Prob. 6QPCh. 6 - Prob. 7QPCh. 6 - Prob. 8QPCh. 6 - Prob. 9QPCh. 6 - Prob. 10QPCh. 6 - Prob. 11QPCh. 6 - Prob. 12QPCh. 6 - Prob. 13QPCh. 6 - Prob. 14QPCh. 6 - Prob. 1WNGCh. 6 - Prob. 2WNGCh. 6 - Prob. 3WNGCh. 6 - Prob. 4WNGCh. 6 - Prob. 5WNGCh. 6 - Prob. 6WNGCh. 6 - Prob. 7WNGCh. 6 - Prob. 8WNGCh. 6 - Prob. 9WNGCh. 6 - Prob. 10WNG
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- Suppose 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?arrow_forwardOver 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.arrow_forwardThe CPI (using a 2020 base year) for 2000 is 65.0. Suppose a household's annual take-home pay in 2000 was $48,500. What would be an equivalent take-home pay in 2020?arrow_forward
- In 2020, the value of the Consumer Price Index (CPI) in a certain country, Polonia, was 235 and median ( nominal) household income was $33,400. In 1950, the CPI was 89 and median (nominal) household income was $8,300. calculate median real household income in 1950, and in 2020, using 2020 as a base yeararrow_forwardWhat is the relationship between real GDP and CPIarrow_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
- The table below lists CPI figures for Tandang Year CPI 1990 125.6 2000 169.7 2010 218.7 2020 254.1 Malcolm earned $58,000 in 1990. What would be the equivalent amount of income in 2010?arrow_forwardThe following table gives the CPI basket for 2000 and 2001. Suppose that 2000 is the reference base period: Item Quantity Price Price (2000) (2000) (2001) Oranges 50 $0.90 $0.75 Bananas 100 $0.50 $0.95 Chicken 200 $2.00 $2.50 Beef 100 $5.00 $4.80 Bread 300 $1.75 $2.00 a. What is the cost of the CPI basket in 2000? b. What is the cost of the CPI basket in 2001? c. What is the CPI for 200O?arrow_forwardBasket 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_forward
- 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?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_forwardThe market basket used to calculate the CPI in Aquilonia is 4 loaves of bread, 6 gallons of milk, 2 shirts, and 2 pairs of pants. In 2005, bread cost $1.00 per loaf, milk cost $1.50 per gallon, shirts cost $6.00 each, and pants cost $10.00 per pair. In 2006, bread cost $1.50 per loaf, milk cost $2.00 per gallon, shirts cost $7.00 each, and pants cost $12.00 per pair. Using 2005 as the base year, what was Aquilonia’s inflation rate in 2006? This question is stumping me. I thought that this answer was 124.4 but it seems that it is 24.4. I cant figure it outarrow_forward
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