Suppose a basket of goods and services has been selected to calculate the CPI and 2012...

Suppose a basket of goods and services has been selected to calculate the CPI and 2012 has been selected as the base year. In 2012, the basket’s cost was $77; in 2013, the basket’s cost was $82; and in 2014, the basket’s cost was $90. The value of the CPI in 2014 was


Answers:	a. 116.9 and the inflation rate was 16.9%.
	b. 109.8 and the inflation rate was 9.8%.
	c. 109.8 and the inflation rate was 16.9%.

Solutions

Expert Solution

CPI 2014 = Price of basket in 2014/Price of basket in base year(2012)*100 = ($90/$77)*100 =116.9

CPI in 2013 = ($82/$77)*100 = 106.5

Inflation rate = (CPI in 2014 - CPI in 2013)/CPI in 2013*100 = [(116.9 - 106.5)/106.5]*100 = 9.8%

Rahul Sunny answered 2 years ago

Next > < Previous

Related Solutions

Suppose a basket of goods and services has been selected to calculate the CPI and 2014...

Suppose a basket of goods and services has been selected to calculate the CPI and 2014 has been selected as the base year. In 2012, the basket's cost was $50; in 2014, the basket's cost was $52; and in 2016, the basket's cost was $58. The value of the CPI in 2016 was _____?

Suppose the fixed basket of goods used to calculate the CPI consists of 4 units of...

Suppose the fixed basket of goods used to calculate the CPI consists of 4 units of good A, 3 units of good B, and 2 units of good C. From year 1 to year 2 the prices of the goods changed as shown in the table. Year 1 is the base year. Price in year 1 Price in year 2 Good A $2.20 $2.53 Good B $3.40 $3.74 Good C $5.60 $5.88 The price of good A changed by %,...

why do we need to calculate the cpi and what is the basket of consumers good...

why do we need to calculate the cpi and what is the basket of consumers good and services?

the total expenditure on a basket of goods and services for year one was 20,000 and...

the total expenditure on a basket of goods and services for year one was 20,000 and for two was 20,400. Use this information to calculate the percentage rate of inflation rate for Years 2.

If the CPI is measuring the movement of prices on goods and services commonly consumed in...

If the CPI is measuring the movement of prices on goods and services commonly consumed in the USA, why is that important to measure? Don't all prices rise over time, anyway? Shouldn't this just be expected? Do certain kinds of price changes bother consumers more than others? What about certain kinds of purchases that can't change along with the economy, like mortgages, car loans or a lease on an apartment?

(x) Suppose that the CPI was 200 in 2006 and was 160 in 1996. Then according to the CPI, $100 in 2006 purchased the same amount of goods and services as $80 in 1996.

2. Which of the following statements is (are) correct?(x) Suppose that the CPI was 200 in 2006 and was 160 in 1996. Then according to the CPI, $100 in 2006 purchased the same amount of goods and services as $80 in 1996.(y) A worker received $5 for a daily wage in 1930. If the CPI was 17.4 in 1930 and is 215.6 today then the value of that 1930 wage in today’s dollars is more than $68.25 but less than...

i. if the typical market basket of goods and services cost $400 in 1995, and the...

i. if the typical market basket of goods and services cost $400 in 1995, and the price index (base year 1992 )for 1995 is 120, then if this same typical bundle cost $420 in 1996, the price index in 1996 would be: a.120 b.between 120 and 125 c.125 d.above 125 ii.supposez the non-institutionalized population over age 15 is 20 million, 10 million of whome are female, the labour force is 16 million, 6 million of whome are female, and the...

ACTIVITY 2 Use the information below to calculate the CPI and inflation rate Basket 8 pair...

ACTIVITY 2 Use the information below to calculate the CPI and inflation rate Basket 8 pair of shoes 4 oil changes Year Price of shoes Price of oil changes 2003 $50 $15 2004 $60 $20 2005 $70 $25 2006 $80 $30 2007 $90 $35 Compute the cost of the basket of goods. 2003 2004 2005 2006 2007 Calculate the CPI use 2003 as the base year. 2003 2004 2005 2006 2007 Calculate the inflation rate use beginning with the inflation...

1. A basket of goods and services purchased by an average urban consumer had a cost...

1. A basket of goods and services purchased by an average urban consumer had a cost of $340 in the year 2015, $350 in the year 2016, and $360 in the year 2017. You may assume the base year is 2015. The inflation rate between 2015 and 2016 was _____ the inflation rate between 2016 and 2017. Group of answer choices the same as lower than higher than it is impossible to say from the information given 2. Bill’s nominal...

Explain how the prices of goods and services used in the CPI differ from the prices...

Explain how the prices of goods and services used in the CPI differ from the prices reflected by GDP deflator.

Subjects