Refer to Table 9-13. 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%.
You might also like to view...
If the foreign import demand curve intersects the home country's export supply curve in its horizontal portion, then:
a. the home country will suffer a loss from international trade. b. the home country will not gain from trade. c. the home country will gain from trade. d. the foreign country will not gain from trade.
When economists study the behavior of sellers, they are studying:
A) supply. B) the role of government. C) demand. D) accounting.