ECO 2302 PRIN MACO W/MYECO ACC >IP<
4th Edition
ISBN: 9781323504161
Author: CASE
Publisher: PEARSON C
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Chapter 7, Problem 2.4P
To determine
Minimum wage in indexation.
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A typical consumer in Lykesville has a market basket consisting of 2 blueberries, 9 peaches, and 10 apples. The data table below provides information on Lykesville’s prices of blueberries, peaches, and apples from 2013 through 2015. 2013 2014 2015Price per unit of blueberries $1.9 $1 $1.7Price per unit of peaches $2.15 $1.25 $1.85Price per unit of apples $2.4 $1.75 $2.3
What is the CPI for 2014 and 2015?
Annual inflation (%) for 2014 and 2015?
Suppose the CPI is 120 in year 1 and 150 in year 2. If First National Bank charges a nominal interest rate of 30 percent in year 2, what is the bank's real interest rate? Explain.
Enlighten at least two reasons of the CPI as an imperfect measure of the cost of living.
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ECO 2302 PRIN MACO W/MYECO ACC >IP<
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- Assess whether the following would be counted as unemployed in the Current Employment Statistics survey. A husband willingly stays home with children while his wife works. A manufacturing worker whose factory just closed down. A college student doing an unpaid summer internship. A retiree. Someone who has been out of work for two years but keeps looking for a job. Someone who has been out of work for two months but isnt looking for a job. Someone who hates her present job and is actively looking for another one. Someone who decides to take a part time job because she could not find a full time position.arrow_forwardSuppose that a typical market based in Japan consists of 200 Apples and 290 Textbooks. The table below shows data on prices for Apples and Textbooks in Japan for three years.Year Price of Apples Price of Textbooks2014 $1.40 2002015 $1.10 1402016 $1.10 200Assume that the base year is 2015. Given this data, what is the price of the basket in 2014? What is the price of the basket in 2015? What is the price of the basket in 2016? What is CPI in 2014? 2015? 2016? What is the inflation rate between 2014 and 2015? What is the inflation rate between 2015 and 2016?arrow_forwardIn compiling data for the CPI, the Bureau of Labor Statistics makes no attempt to adjust the data to reflect quality changes.” True or false? Explain.arrow_forward
- Use the following table to answer the question. The table shows the prices and the quantities consumed in Vegetarian Country. Suppose the base year is 2020. Also, suppose that 2020 is the year the typical consumption basket was determined, so the quantities consumed in 2020 are the only quantities needed to calculate the CPI in each year. Year Price of Carrots Quantity of Carrots Price of Celery Quantity of Celery 2020 $2.00 100 $1.00 100 2021 2.50 90 0.90 120 2022 2.75 105 1.00 130 What are the values of the CPI in 2020, 2021, and 2022, respectively? a. 2020: 100; 2021: 111; 2022: 139.6 b. 2020: 100; 2021: 109.2; 2022: 116 c. 2020: 100; 2021: 113.3; 2022: 125 d. 2020: 83.5; 2021: 94.2; 2022: 100 e. None of the answer choices are correct.arrow_forwardThe CPI’s basket of goods includes potato chips, over half of which are made from potatoes grown in Idaho. Wildfires this summer destroyed acres of potato crops in Idaho, causing a spike in the price of potatoes, and there was a 30% increase in the price of potato chips. As a result, the CPI calculation showed an increase of 2% in the Fall of this year versus last year. Please explain if this 2% increase is reflective of the overall price level, and if not, why?arrow_forwardIf the prices of homes go up by 5% and the prices of concert tickets rise by 10%, which will have the larger impact on the CPI? Why?arrow_forward
- Explain why changes in the cost of living for any particular individual or family may differ from changes in the official cost-of-living-index, the CPI.arrow_forwardYou are now required to compute the consumer price index (CPI) and the inflation in one village. To do this task, you go to that village to collect data of households’ consumption in that village. After collecting data, you find that households in this village consume a standard basket of 3kg of rice, 1.5kg of meat and 3kg of vegetable and the prices of these products are given below: a) CPI in Jan 2017, in Feb 2017, and in Mar 2017 by taking Jan 2017 as the base month.b) Inflation rate from Feb to Mar 2017arrow_forward
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