Question

In: Economics

By January 2014 the US population had grown to 317.3 million and the US Federal Debt...

By January 2014 the US population had grown to 317.3 million and the US Federal Debt was a reported $17.3 trillion. Calculate the January 2014 Federal Debt per capita and use the calculation in a meaningful sentence.

From class we learned that in 2010 the federal debt (in millions) was $13,561,623 and the population of the U.S. was 309 million. Use these values to compute the federal debt per capita in 2010.

In 1980, a Domino’s large pizza cost $4.99. What would be the cost of that pizza in 1995 dollars?

In 1986, a certain model of car cost $13,000. What would be the cost of that car in 2012 dollars? How does this compare to the actual cost of a typical new car in 2012?

According to a NY Times article on December 13, 2009, the average selling price of a 32” LCD TV was $600. What would be the cost of that same TV in 2015 dollars?

In 2009, the price of a package of crayons was $2.80. If it was the year 1988, what would the price be?

Use the chart below to answer: Using the starting value of $112 in 1995, which year was a better price when considering inflation? 2000, 2007 or 2011? (Assume that 1995 is a fair value for the goods and services.)

Year	Real Price
1995	$112
2000	$131
2007	$148
2011	$179

Expert Solution

Federal debt per capita in 2014 :-

17300000000000/317300000= $54522.5/ per person

Federal debt per capita in 2010 :-

13561623/309000000 = 0.0438

This means that the amount of debt in economy was very low in 2010 and it has raised in 2014

Calculation of inflation rates :-

Generally in order to find the future prices CPI is calculated ,

However to find more accurate pricing we use inflation rates formula .

The major assumption :-

1) The inflation rate before 1995 remains the same as in 1995 ( we are assuming 1995 as base year of price index )

2) The inflation rate after 2011 remains same as 2011 .

Therefore using the following formulas we will find out the inflation rates per year .

(((Change in price / Base Year price )/100)/number of years between two prices )

Thus inflation rate from 1995-2000= 3.15%

2000-2007= 1.85%

2007-2011=5.06%

Price of pizza :-

If the price of pizza is $4.99 in 1980

Then at the inflation rate of 3.15

1995 price = 4.99(1 + inflation)ⁿ

= 4.99(1.0315)¹⁵=$7.95

Cost of Car :-

The current cost of car will increase yearly as per their respective inflation rates .

Current cost of car = 13000 (1.0315)¹⁴ (1.0185)⁷(0.0506)⁵

=$32927.42

Cost of LCD TV :-

Cost of LCD = 600 (1.0506)⁶=$806.82

Cost of crayons :-

(2.80/(1.0506)²(1.0185)⁷(1.0315)¹⁴)

=$ 1.54

Rahul Sunny answered 1 year ago

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