If the CPI was 125 this year and 120 last year, then
a. the cost of the CPI basket of goods and services increased by 4.2 percent this year.
b. the price level increased by 4.2 percent this year.
c. the inflation rate for this year was 4.2 percent.
d. All of the above are correct.
d
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A barter exchange
A) always takes place without greed on behalf of the trading parties. B) takes place without money. C) tends to have lower transaction costs compared to exchanges using money. D) is characterized by all of the above.
A typical household in Orangeland consumes only orange juice and shorts. Last year, which was the base year, the household spent $400 on juice and $120 on shorts. In the base year, juice was $2 a bottle and shorts were $10 a pair
This year, juice is $3 a bottle, shorts are $12 a pair, and a typical household has bought 180 bottles of juice and 14 pairs of shorts. a) What is the basket used in the CPI? b) Calculate the CPI in the current year. c) Calculate the inflation rate in the current year. d) Is the inflation rate that you've calculated likely to be biased? Why or why not?