The consumer price index (CPI) is a fixed-weight index. It compares the price of a fixed bundle of goods in one year with the price of the same bundle of goods in some base year. Calculate the price index of a bundle containing 100 units of good X, 150 units of good Y, and 25 units of good Z in 2018, 2019, and 2020. Calculate the percentage change in index between 2018 and 2019 and again between 2019 and 2020. What is rate of inflation/deflation between 2019 and 2020?

ECON MACRO
5th Edition
ISBN:9781337000529
Author:William A. McEachern
Publisher:William A. McEachern
Chapter6: Tracking The U.s. Economy
Section: Chapter Questions
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Q1: The consumer price index (CPI) is a fixed-weight index. It compares the price of a fixed bundle of goods in one year with the price of the same bundle of goods in some base year. Calculate the price index of a bundle containing 100 units of good X, 150 units of good Y, and 25 units of good Z in 2018, 2019, and 2020. Calculate the percentage change in index between 2018 and 2019 and again between 2019 and 2020. What is rate of inflation/deflation between 2019 and 2020?

 

GOOD

 

QUANTITY CONSUMED

 

2018

 

PRICES

 

2019

 

PRICES

 

2020

 

PRICES

 

 

 

X

 

100

 

Rs. 10.00

 

Rs.10.50

 

Rs. 10.75

 

 

 

Y

 

150

 

Rs. 10.50

 

Rs. 20.00

 

Rs. 20.00

 

 

 

Z

 

25

 

Rs. 30.00

 

Rs. 30.25

 

Rs. 30.00

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