Draw the aggregate demand curve and use it to illustrate what would happen to the aggregate quantity demanded if the CPI increased. Use the three “effects” that determine the slope of the aggregate demand curve to explain why the aggregate quantity demanded changes the way you illustrated it.
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- In Felixania, cat food constitutes 45 percent of the typical basket of goods for a typical consumer, dog food constitutes 3 percent, and all other goods constitute the remaining 52 percent. Assume the price of cat food rises by 4 percent, the price of dog food falls by 10 percent, and prices remain constant for all other goods. Based on the information given, we can definitely say CORRECT ANSWER: the consumer price index (CPI) in Felixania is more than in the previous year. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.Suppose that a typical consumer buys the following quantities of three commodities in 1993 and 1994. 1994 per Unit Price Commodity Quantity 5 units 2 units 3 units 1993 per Unit Price Food $ 6.00 $5.00 Clothing $7.00 $9.00 Shelter $12.00 $19.00 Which of the following can be concluded about the consumer price index (CPI) for this individual from 1993 to 1994? It remained unchanged. It decreased by 25%. It decreased by 20%... It increased by 20%. It increased by 25%. SIn the country of Solow, people buy only three things: food, rent, and luxury goods. Last year, the price of luxury goods went down, and the price of rent increased five percent. Overall CPI inflation increased 10%. What happened to the price of food? a) The price of food increased by exactly 10% b) The price of food increased by more than 10% c) The price of food increased by between 5% and 10% d) The price of food must have gone down e) None of these choices are correct
- Suppose that the following table shows the average retail price of butter (the price of salted, grade AA butter per pound) and the Consumer Price Index (CPI) from 1980 to 2010, scaled so that the CPI = 100 in 1980. 1980 2010 100.00 1.96 218.06 3.12 CPI Retail price of butter Calculate the real price of butter in 1980 dollars. (Enter your responses rounded to two decimal places in the table below.) Real price of butter 1980 1.96 CPI 1990 158.56 1.94 1980 1990 1.22 Between 1980 and 2000, the real price of butter has decreased What is the percentage change in the real price (in 1980 dollars) from 1980 to 2000? The real price of butter has decreased by 42.35 %. (Enter your response rounded to two decimal places.) Next, convert the CPI into 1990 = 100 and determine the real price of butter in 1990 dollars. To do this, first convert the CPI into 1990 dollars in the table below. (Enter your responses rounded to two decimal places in the table below.) 1990 100 2000 208.98 2.37 2000 1.13 2000 ■…Question 17 One problem with the CPI is the "substitution bias," which refers to consumers buying more of a good that has become cheaper and less of a good that has become more expensive. Assume that consumers consider Pepsi and Coke to be substitutes, so that when the price of Coke increases, consumers purchase less Coke and more Pepsi. When the CPI is calculated following the increase in the price of Coke, the substitution bias causes the CPI to O understate inflation since both the increase in the price of Coke and the increase in the amount of Pepsi purchased enter the CPI calculation O understate inflation since only the decrease in the price of Pepsi enters the CPI calculation O overstate inflation since both the increase in the price of Coke and the decrease in amount of Coke purchased enter the CPI calculation overstate inflation since only the increase in the price of Coke enters the CPI calculationThe following table shows a money demand schedule, which is the quantity of money demanded at various price levels (PP). Fill in the Value of Money column in the following table. Price Level (P) Value of Money (1/P) Quantity of Money Demanded 1.00 1.5 1.33 2.0 2.00 3.5 4.00 7.0 Now consider the relationship between the price level and the quantity of money that people demand. The lower the price level, the (a. more, b. less) money the typical transaction requires, and the (a. more, b. less) money people will wish to hold in the form of currency or demand deposits. Assume that the Fed initially fixes the quantity of money supplied at $3.5 billion. Use the orange line (square symbol) to plot the initial money supply (MS1) set by the Fed. Then, referring to the previous table, use the blue connected points (circle symbol) to graph the money demand curve. (Graph in image) According to your graph, the equilibrium value of…
- The consumer price index (CPI) is a fixed-weight index. It compares the price of a fixed bundle of goods one year with the price of the same bundle of goods in some base year. Calculate the price of a bundle containing 100 units of good X, 150 units of good Y, and 25 units of good Z in 2008, 2009, and 2010. Convert the results into an index by dividing each bundle price figure by the bundle price in 2008. Calculate the percentage change in your index between 2008 and 2009 and again between 2009 and 2010.Was there inflation between 2009 and 2010? QUANTITY CONSUMED 2008 PRICES 2009 PRICES 2010 PRICES GOOD 100 $1.00 $1.50 $1.75 Y 150 1.50 2.00 2.00 25 3.00 3.25 3.00In context of Short Run Aggerate Supply (SRAS), explain why as CPI decreases (increases), Real GDP supplied also decreases (increases): In other words, why is there a direct relationship between the CPI and the Real GDP in the short run?Draw a graph where inflation falls and GDP increases.
- The following table shows a money demand schedule, which is the quantity of money demanded at various price levels (P). Fill in the Value of Money column in the following table. Quantity of Money Demanded (Billions of dollars) 1.5 Price Level (P) Value of Money (1/P) 1.00 1.33 2.0 2.00 3.5 4.00 7.0 Now consider the relationship between the price level and the quantity of money that people demand. The lower the price level, the money the typical transaction requires, and the money people will wish to hold in the form of currency or demand deposits. Assume that the Fed initially fixes the quantity of money supplied at $3.5 billion. Use the orange line (square symbol) to plot the initial money supply (MS1) set by the Fed. Then, referring to the previous table, use the blue connected points (circle symbol) to graph the money demand curve.When shopping you notice that a pair of jeans costs $20 and that a tee-shirt costs $10. You compute the price of jeans relative to tee-shirts. a. The dollar price of jeans and the relative price of jeans are both nominal variables. b.The dollar price of jeans and the relative price of jeans are both real variables. c.The dollar price of jeans is a nominal variable; the relative price of jeans is a real variable. d.The dollar price of jeans is a real variable; the relative price of jeans is a nominal variable. Select one: O a ObHow does the aggregate goods and services market differ from the regular supply and demand market? Address the measures of price, quantity, and the demand and supply curve(s).
