Refer to Table 20-13. Consider a simple economy that produces only three products: tacos, earplugs, and toothbrushes. Use the information in the table to calculate the inflation rate for 2016, as measured by the consumer price index
What will be an ideal response?
Total expenditures for 2001 = (5 × $1.50 ) + (10 × $6.00 ) + (3 × $2.50 ) = $75.00.
Total expenditures for 2015 = (5 × $2.00 ) + (10 × $7.50 ) + (3 × $3.50 ) = $95.50.
Total expenditures for 2016 = (5 × $2.25 ) + (10 × $7.00 ) + (3 × $3.50 ) = $91.75.
The CPI for 2015= [($95.50/$75.00 ) × 100] = 127.33
The CPI for 2016 = [($91.75/$75.00 ) × 100] = 122.33.
So, the inflation rate for 2016 = [((122.33 ? 127.33 )/127.33 ) × 100 )] = ?3.9%.
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The 1994 agreement that eliminated most tariffs among the United States, Canada, and Mexico is known as
A) the Pacific Trade Association. B) the Western Trade Union. C) Trade Without Borders. D) NAFTA.
If the demand curve is given by Q = a + bp, then b is
A) positive. B) the quantity demanded when price is zero. C) the change in quantity demanded if price changes by 1. D) different at different points on the demand curve.