a) What is the Consumer Price Index (CPI)? b) Consider an economy that produces and consumes shoes and houses. In the table below are data for two different users. Year 2000 Year 200 1 Price of a house $120,000 $145,000 Price of a pair of shoes $150 $170 Number of houses produced 1,000 1,050 Number of pairs of shoes 650,000 525,000 (i) Calculate the CPI for both years. (ii) Calculate the rate of inflation for 2001 using the CPI. (iii) Calculate the GDP deflator for both years. (iv) Calculate the rate of inflation for 2001 using the GDP deflator

a) What is the Consumer Price Index (CPI)? b) Consider an economy that produces and consumes shoes and houses. In the table below are data for two different users. Year 2000 Year 200 1 Price of a house $120,000 $145,000 Price of a pair of shoes $150 $170 Number of houses produced 1,000 1,050 Number of pairs of shoes 650,000 525,000 (i) Calculate the CPI for both years. (ii) Calculate the rate of inflation for 2001 using the CPI. (iii) Calculate the GDP deflator for both years. (iv) Calculate the rate of inflation for 2001 using the GDP deflator

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter6: Tracking The U.s. Economy

Section: Chapter Questions

Problem 4.9P

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13. Refer to Table 24-3. Calculate the inflation rate for March. 14. Explain how the prices of goods and services used in the CPI differ from the prices reflected by GDP deflator.
6) a. The Consumer Price Index (CPI) is determined by estimating the prices of goods and services in the economy at the same rate as the cost of living increases. comparing the value of a market basket of goods that consumers typically purchase to the value of the basket in cities around the country. averaging all the prices of goods and services in the economy. comparing the value of a market basket of goods that consumers typically purchase to the value of the basket in a base year. b. The Bureau of Labor Statistics (BLS) would calculate the rate of inflation for year 5 by adding the CPI of year 4 to the CPI of year 5, and then dividing by 2. adding the CPI of year 4 to the CPI of year 5, and then dividing by the average of year 4 and year 5. subtracting the CPI of year 4 from the CPI of year 5, and then dividing by the CPI of year 5. subtracting the CPI of year 4 from the CPI of year 5, and then dividing by the CPI of year…
4. What is the Consumer Price Index of the Philippines?
Monthly Consumer Price Index from January 2015 to December 2020 (Source: STATIN) Month 2015 2016 2017 2018 2019 2020 January 85.4 88.6 90.9 95.2 97.4 102.5 February 84.8 87.9 91.1 95.1 97.4 103.2 March 85.3 87.8 91.4 95.0 98.2 102.9 April 85.4 87.5 91.7 94.6 98.3 103.7 May 85.9 87.7 91.8 94.6 99.1 103.8 June 86.3 88.5 92.4 95.0 99.0 105.2 July 87.0 88.9 92.9 95.9 100.0 105.7 August 87.7 89.3 93.2 96.8 100.8 105.9 September 88.1 89.7 93.8 97.9 101.2 106.1 October 88.4 89.9 94.2 98.6 101.8 106.9 November 88.8 90.3 94.7 98.6 103.2 107.6 December 89.0 90.5 95.2 97.6 103.6 109.0 From the Table above: In December 2018, Mr. Logan Hepburn began receiving a salary of $100,000 per month.Up to December 2020, his salary has remained unchanged. What is his ‘‘real wage’’ in December…