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Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985

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BuyFindarrow_forward

Brief Principles of Macroeconomics...

8th Edition
N. Gregory Mankiw
ISBN: 9781337091985
Textbook Problem

Over a long period of time, the price of a candy bar rose from $0.20 to $1.20. Over the same period, the CPI rose from 150 to 300. Adjusted for overall inflation, how much did the price of the candy bar change?

To determine

Calculating the real increase in price.

Explanation

The rise in price and inflation is calculated using the following formula:

Percentage increase in price = (PricePresentPricePreviousPricePrevious)×100=(1.20.20.2)×100=500%

The percentage increase in price is 500% which is a six fold increase

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