Question
In: Economics
CPI Expenditure category Index Sept. 2019 Sept. 2020 % change All items (total) 256.76 260.28 1.4...
| CPI Expenditure category | Index | ||
| Sept. 2019 | Sept. 2020 | % change | |
| All items (total) | 256.76 | 260.28 | 1.4 |
| Food and non-alcoholic beverages | 241.54 | 251.37 | 3.9 |
| Alcoholic beverages | 253.26 | 257.73 | |
| Housing | 320.57 | 327.12 | 2.0 |
| Energy and utilities | 204.66 | 207.45 | 1.4 |
| Apparel | 127.01 | 119.55 | -6.0 |
| Transportation (vehicle, air & transit fares) | 324.72 | 308.14 | -5.1 |
| Vehicles | 145.85 | 147.36 | 1.0 |
| Motor fuel | 232.66 | 196.76 | -27.2 |
| Vehicle insurance | 569.11 | 540.49 | -5.0 |
| Airline fares | 263.15 | 197.42 | -25.0 |
| Medical services | 540.81 | 567.53 | 4.9 |
| College tuition | 867.02 | 873.20 | 0.1 |
| Textbooks | 235.33 | 235.05 | -0.1 |
| Services (non-medical) | 339.38 | 345.88 | 1.9 |
|
Base year: 1982-84 (purchasing power of consumer dollar = $1.00 in 1982-84) |
|||
1. According to the CPI, the overall inflation rate from Sept. 2019 - Sept. 2020 was 1.4% for consumer goods and services. However, that doesn't mean prices for everything went up. Referring to the table above, which of the following categories of spending did not have price increases from Sept. 2019 - Sept. 2020? (more than one answer)
a. transportation b. tuition c. food and beverages d. housing e. medical services
2. Using the index numbers above, calculate the rate of inflation for alcoholic beverages from Sept. 2019 - Sept. 2020. (calculate within one decimal point)
[Hint: start with the formula for calculating the % rate of inflation from the text and lecture]
Solutions
Expert Solution
1. According to the CPI, the overall inflation rate from Sept. 2019 - Sept. 2020 was 1.4% for consumer goods and services.
However, that doesn't mean prices for everything went up.
Referring to the table above, which of the following categories of spending did not have price increases from Sept. 2019 - Sept. 2020?
Correct answer:
a. transportation
This category witnessed negative growth in prices, at (- 5.1%)
The category b. tuition witnessed very low growth in prices, at just 0.1%. However, it is not negative.
---
2. Using the index numbers above, calculate the rate of inflation for alcoholic beverages from Sept. 2019 - Sept. 2020.
The rate of inflation can be found by:
[ (CPI in Sept. 2020 minus CPI in Sept. 2019) / CPI in Sept. 2019 ] x 100
= [(257.73 - 253.26) / 253.26] x 100
= 1.76% rounded off to 1.8%
Thus, the rate of inflation for alcoholic beverages from Sept. 2019 - Sept. 2020 is 1.8%
Rahul Sunny answered 2 years agoRelated Solutions
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52,295
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39,478
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