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Suppose that people consume only three goods, as shown in this table: a. What is the percentage change in the price of each of the three goods? b. Using a method similar to the CPI, compute the percentage change in the overall price level. c. If you were to learn that a bottle of Gatorade increased in size from 2017 to 2018, should that information affect your calculation of the inflation rate? If so, how? d. If you were to learn that Gatorade introduced new flavors in 2018, should that information affect your calculation of the inflation rate? If so, how?

BuyFind

Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781337091985
BuyFind

Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
Publisher: Cengage Learning
ISBN: 9781337091985

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Chapter
Section
Chapter 6, Problem 3PA
Textbook Problem

Suppose that people consume only three goods, as shown in this table:

Chapter 6, Problem 3PA, Suppose that people consume only three goods, as shown in this table: a. What is the percentage

a. What is the percentage change in the price of each of the three goods?

b. Using a method similar to the CPI, compute the percentage change in the overall price level.

c. If you were to learn that a bottle of Gatorade increased in size from 2017 to 2018, should that information affect your calculation of the inflation rate? If so, how?

d. If you were to learn that Gatorade introduced new flavors in 2018, should that information affect your calculation of the inflation rate? If so, how?

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