6. The Consumer Price Index (CPI) Which of the following does the consumer price index (CPI) include? Household purchases of used cars Military equipment purchases by the government U.S. exports For which of the following is the CPI not used? Indexing payments Setting an inflation target O Calculating real GDP from nominal GDP Which of the following goods are included in the CPI but ignored by the GDP deflator? Household purchases of used computers Fruits produced in the United States and consumed by U.S. households U.S. cars purchased by foreigners

micro 1

1. What is a market-clearing model? When is it appropriate to assume that market clear? 2. Use the model of supply and demand to explain how fall in the price of frozen yogurt would affect the price of ice cream and the quantity of ice cream sold. In your explanation, identify the exogenous and endogenous variables. 3. Consider an economy that produces and consumes hot dogs and hamburgers. In the following table are data for two different years. Goods Hot dogs Hamburgers Quantity (2010) 200 200 Price (2010) $2 $3 Quantity (2020) 250 250 Price (2020) $4 $4 Using 2010 data as the base year Compute the following statistics for each year. Nominal GDP, Real GDP, GDP Deflator, Inflation rate using GDP deflator, CPI, Inflation rate using CPI. (Hint: i) to calculate CPI use base year fixed quantity Hot dogs 200 and Hamburgers 200, ii) To calculate inflation rate, use percentage change in price level between two years.)

See Figure 2.2 and examine the model.  Unlike other circular flow models, this model is missing another sector/s. what is the missing sector?