Assume that the index number representing the price level changes from 110 in 2018 to 120 in 2019.

Assume that the index number representing the price level changes from 110 in 2018 to 120 in 2019. Then it changes from 120 in 2019 to 130 in 2020. Is the inflation rate the same each year? Calculate and explain your answer

1. Change from 2018 to 2019=

2. Change from 2019 to 2020=

Expert Solution

1. CPI changes from 110 to 120 which represent inflation rate of (120-110)*100/110=9.1%

2. CPI changes from 120 to 130 which represents inflation of =(130-120)*100/120=8.33%

So, Inflation rate is not same each year eventhough the index change of 10 unit is consistent since the base price level change hence the inflation percentage

Rahul Sunny answered 2 years ago

1.If the price index increases from 120 to 130 then the inflation rate during the past...

1.If the price index increases from 120 to 130 then the inflation rate during the past year was 10%. True or False 2.If the price index has a value of 122 then the inflation rate during the past year must have been 22%. True or False 3.The GDP deflator is used to calculate the inflation rate. True or False 4. You deposit $900 in a savings account and one year later you have $945. At the same time, the CPI...

(A) (B) (C) Price Level Real GDP Price Level Real GDP Price Level Real GDP 110...

(A) (B) (C) Price Level Real GDP Price Level Real GDP Price Level Real GDP 110 290 100 215 110 240 100 265 100 240 100 240 95 240 100 265 95 240 90 215 100 290 90 240 a. Which set of data illustrates aggregate supply in the immediate short-run in North Vaudeville? The data in (Click to select)CAB. Which set of data illustrates aggregate supply in the short run in North Vaudeville? The data in...

Calculate a price index for 2018, 2019, and 2020 using the following information about prices. Let...

Calculate a price index for 2018, 2019, and 2020 using the following information about prices. Let the market basket consist of the price of one pizza pie, two sodas, and four caffe lattes. Let the year 2018 be the base year (with an index value of 100). See the instruction video, "inflation.ppsm". Year Price of a pizza Price of a Soda Price of a Caffe Latte 2018 2019 2020 $6.00 $6.50 $7.0 $0.50 $0.55 $0.65 $1.50 $2.20 $2.60 A. Calculate...

The price index from 2016 to 2018 is : 200, 210, 220. Derive a forecast for...

The price index from 2016 to 2018 is : 200, 210, 220. Derive a forecast for 2019 on the basis of adaptive expectations using 0.2, 0.3 and 0.5 as weights in 2016, 2017 and 2018 respectively. The optimal forecast for 2019 is 225 using all available information. What is the expected price index in 2019 based on rational expectations? The actual value in 2019 is 223. Based on this, Paul concluded that the expected value in (b) derived using rational...

The CPI is 110 on January 1, 2018, and 114 on January 1, 2019. John’s nominal...

The CPI is 110 on January 1, 2018, and 114 on January 1, 2019. John’s nominal wage is $1,000 per month on January 1, 2018, and $1,100 per month on January 1, 2019. What is John's real wage on January 1, 2018? Use the CPI to calculate the inflation rate in 2018. What is the percentage increase in John's nominal wage from 2018 to 2019? Using the arithmetic trick, what is the approximate percentage change in John’s real wage? According...

Price Level & inflation Definition of the Consumer Price Index and the GDP deflator Calculation of...

Price Level & inflation Definition of the Consumer Price Index and the GDP deflator Calculation of price index (e.g., CPI, GDP deflator) Calculation of inflation (Note: inflation is the rate of change in a price index from one year to another) Limitation of the CPI (e.g., commodity substitution bias, quality bias, new goods bias, outlet substitution bias)

Product Quantity 2017 Price 2017 Quanity 2018 Price 2018 Meat 100 $10 120 $12 Potatoes...

Product Quantity 2017 Price 2017 Quanity 2018 Price 2018 Meat 100 $10 120 $12 Potatoes 200 $2 180 $3 Assume the base year is given as 2017 and the market basket for the consumer price index has two products–meat and potatoes–with the values in 2017 and 2018 for price and quantity given by the table above. The Consumer Price Index for 2018 equals 2) If the price index in an certain economy rises in three consecutive years from 100...

Assume the company has a stock option pool representing 15% of the total number of shares....

Assume the company has a stock option pool representing 15% of the total number of shares. The options vest in 5 years. How many shares of the company should the VC ask for today to avoid dilution of her ownership?

1. a.Suppose that the consumer price index P=120, the annual growth rate in money demand is...

1. a.Suppose that the consumer price index P=120, the annual growth rate in money demand is 3%, and the annual change in money supply is 400 dollars. If the current money supply is 5,000 dollars. Find the change in consumer price index ( ΔP)? b.If the price of a car in the U.S is 8,000 $, and in Japan the same car costs 870,000 Japanese yen ¥. Find the exchange rate under the purchasing power parity (PPP)? That is you...

A B C PRODUCT PRICE LARGE SCREEN 100 110 120 $12 MED SCREEN 70 60 $10...

A B C PRODUCT PRICE LARGE SCREEN 100 110 120 $12 MED SCREEN 70 60 $10 SMALL SCREEN 50 40 30 $8 Please answer the next 6 questions based on the information provided in the table above for a profit-maximizing firm producing HD TVs. Any of the three output combinations of HD TVs can be produced for the same cost. And to produce any one of the combinations requires that the firm operate at full capacity. The profit associated with...

Question