Refer to Table 9-12. Consider a simple economy that produces only three products: burritos, flashlights, and golf balls. 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 = (10 × $1.00 ) + (15 × $5.00 ) + (8 × $2.00 ) = $101.00.
Total expenditures for 2015 = (10 × $1.50 ) + (15 × $7.00 ) + (8 × $3.00 ) = $144.00.
Total expenditures for 2016 = (10 × $1.75 ) + (15 × $6.75 ) + (8 × $3.50 ) = $146.75.
The CPI for 2015 = [($144.00/$101.00 ) × 100] = 142.57.
The CPI for 2016 = [($146.75/$101.00 ) × 100] = 145.30.
So, the inflation rate for 2016 = [((145.30 ? 142.57 )/142.57 ) × 100)] =1.9%.
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The the government increases the level of government expenditure. If there is no change in the aggregate supply curve, then aggregate demand will ________, real GDP will ________, and the price level will ________
A) increase; remain the same; increase B) remain the same; increase; increase C) increase; increase; increase D) decrease; increase; increase E) decrease; remain the same; decrease
If all inputs are increased by 5 percent and output increases by 8 percent, then the
A) firm experiences constant returns to scale. B) long-run average cost curve slopes downward. C) long-run average cost curve shifts downward. D) firm experiences diseconomies of scale.