Principles of Macroeconomics - With Access
7th Edition
ISBN: 9781305383579
Author: Mankiw
Publisher: CENGAGE L
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Chapter 11, Problem 1QCMC
To determine
Equivalent ofConsumer Price Index.
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What is the relationship between GDP, inflation, and CPI?
What does the CPI means?
a.
The gross domestic product
b.
The labor force participation rate
c.
The changes in the price level
d.
The level of unemployment in a country
Basket Items Unit $ per unit (2020) $ per unit (2021) $ per unit (2022)
Cougar Tail 1 donut $5 $4.50 $4.25
Mint Brownie ½ sheet $29.98 $34.99 $39.99
Graham Canyon ice cream 5 quarts $14.99 $16.49 $17.99
Calculate the CPI for each year, using 2020 as the base year.
Chapter 11 Solutions
Principles of Macroeconomics - With Access
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- Describe how the CPI is calculated. How might the CPI overstate the true increase in cost of living?arrow_forwardOver a long period of time the CPI rose from 100 to 150. What does a CPI of 150 mean? If the price of imported vegetables rises, between the CPI and the GDP deflator, which one of the two will be affected more? Explain.arrow_forwardThe largest component in the basket of goods andservices used to compute the CPI isa. food and beverages.b. housing.c. medical care.d. apparel.arrow_forward
- Price (2011) Quantity (2012) $5.00 $6.00 Item Quantity (2011) Price (2012) Magazines 450 200 $4.50 $8.00 $10.50 400 Movie tickets 50 Pizzas 100 $10.00 120 The data in the table above shows the consumption by families in an economy. The year 2011 is the reference base period. Based on the table above, the CPI for 2012 is A. 105.1. B. 5.0 percent. C. 102.5. O D. 100. O E. 98.5.arrow_forwardCalculate the CPI for 2017arrow_forwardWhat is CPI? Define it and discuss why it is important.arrow_forward
- An increase in the price of imported goods will show up in: Select one: a. the CPI but not in the GDP deflator. b. the GDP deflator but not in the CPI. c. both the CPI and the GDP deflator. d. neither the CPI nor the GDP deflator.arrow_forwardThe CPI measures the price of all consumer goods. Is this true or false?arrow_forwardWhat is the Consumer Price Index (CPI)?arrow_forward
- A painting from an Italian art gallery bought by a Canadian citizen a month ago, is considered when computing the current Canadian ________. An investment in some new machines, made by Roots, a publicly held Canadian brand, is taken into account when computing the current Canadian ________ but not the ________ Select one: a. CPI, GDP deflator, CPI b. GDP deflator, CPI, CPI c. CPI, CPI, GDP deflator d. GDP deflator, CPI, GDP deflatorarrow_forwardYou are given the following: Year Quantity of Apples Price of Apples Quantity of Peaches Price of Peaches 2018 400 $.60 200 $.70 2019 500 $.64 210 $.90 Base Year = 2018 1d. Calculate real GDP for 2019. Show your work. 1e. Calculate the GDP Deflator for 2019 to the nearest tenth. Show your work. 1f. What does your previous number mean? 1g. Calculate the CPI for 2019 to the nearest tenth. Show your work.arrow_forwardUse your CPI Chart to calculate the numbers 2-4. 2. If you made $38,000 in 1997, how much money would you have to make in 2006 to maintain your real income? Explain.arrow_forward
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