MACROECONOMICS-W/MINDTAP
15th Edition
ISBN: 9781305361409
Author: Gwartney
Publisher: CENGAGE L
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Chapter 7, Problem 8CQ
To determine
Identify the movie that has the largest real box office receipts.
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Government survey takers determine that typical family expenditures each month in the year designated as the base year are as
follows:
NO
25 pizzas, $10 each
Apartment rent, $600 per month
Gasoline and car maintenance, $100 per month
Phone service (basic service plus 10 long-distance calls). $50 per month
In the base year, the CPI is 1.000. In the year following the base year, the survey takers determine that pizzas have risen to $11 each,
apartment rent is $640, gasoline and maintenance costs are $120, and phone service has dropped in price to $40.
Instructions: Enter your responses by rounding the CPI to three decimal places and the rate of inflation to one decimal place.
a. Find the CPI in the subsequent year and the rate of inflation between the base year and the subsequent year.
CPL 104.500
Rate of inflation:
4.5%
b. The family's nominal income rose by 5 percent between the base year and the subsequent year. Are they worse off or better off
in terms of what their income is able to…
Below is a list of annual CPI values for the years 2000-2003. Using these values please calculate
the average annual rate of inflation over this period.
Table
Year
CPI
2000 200.2
2001 205.6
2002 208.2
2003 209.1
4.45%
1.46%
2.97%
Q)Suppose you earned $80,000 in 2018 and the CPI value for the year was 244. Calculate your 2018 income in 2000 dollars. The CPI value for the year 2000 was 171.
Chapter 7 Solutions
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- 2018 2019 Item Quantity Price Quantity Price Books 10 €30 8 €50 Pens 20 €1 15 €2 In 2018, consumers in a hypothetical economy consumed only books and pens. The prices and quantities for 2018 and 2019 are listed in the table above. The reference base period is 2018. Calculate the CPI in 2019. Give only a numerical answer. Where needed, use only a point () for decimals (e.g., 3.25, not 3,25) and no thousands separator (e.g., 2000, not 2,000).arrow_forwardIn each of the following cases, explain clearly how the CPI might misrepresent changes in consumer prices (Commodity substitution bias, Introduction of new goods, or Un-measured quality changes). In each case, speculate as to whether CPI overstates or understates consumer expenses. (a) By 1990, expensive personal computers became a common expenditure in consumer baskets. However, some governments were still calculating the consumer’s basket using a 1975 survey. (b) Between 2007 and 2015, there were significant improvements in smartphones. (c) Compared to 1970, households in 2015 took more vacations. (d) Food quality has deteriorated over time, even as consumers purchase the same amount.arrow_forwardItems 2016 2017 2018 Pizza $10 $20 $20 Cell Phone Service $90 $180 $180 Crude Oil (barrel) $90 $180 $90 Calculate the percentage increase in CPI from the base year( 2017) to 2018arrow_forward
- Below are the values of the CPI for each year from 1992-1996. For each year, beginning with 1993, calculate the rate of inflation from the previous year. Year CPI 1992 1.40 1993 1.45 1994 1.48 1995 1.52 1996 1.57 Please enter your answers as percentages rounded to the nearest tenth of a percent (ie. if your answer in your calculator is 0.02644 enter your answer as 2.6 or 2.6% not 3%, 2.644, or 0.026). What is the inflation rate from 1992 - 1993? What is the inflation rate from 1993-1994? What is the inflation rate from 1994-1995? What is the inflation rate from 1995-1996?arrow_forwardThe GDP deflator for this year is calculated by dividing the using by the using and multiplying by 100. However, the CPI reflects only the prices of all goods and servicesarrow_forwardAs a result of a drought, prices and produced quantities in a country change as follows: Assume that the economy produces and consumes only the above agricultural products.a) Calculate the nominal GDP and the real GDP for the year 2021 with the base year 2020.b) By how many percent have the prices of goods increased?c) Calculate the CPI for the year 2021 according to Laspeyres and Paasche.d) Describe the general differences between the CPI and the GDP deflator.arrow_forward
- The CPI was 218.1 in 2010 compared to 99.6 in 1983. Suppose that the price of a ticket at a local movie theater rose from $4 to $10 between 1983 and 2010. Did the real ticket price increase or decrease? Calculate the 1983 ticket price measured in 2010 dollars.arrow_forwardWhat is the interpretation of a consumer price index (CPI) of 122 in year X? A bundle of goods in year X costs $22 more than in the base year. A bundle of goods in year X costs $122 more than in the previous year. A bundle of goods in year X costs 122% more than in the base year. A bundle of goods in year X costs 22% more than the previous year. A bundle of goods in year X costs 22% more than in the base year. p_arrow_forwardThe market basket used to calculate the CPI in Aquilonia is 4 loaves of bread, 6 gallons of milk, 2 shirts, and 2 pairs of pants. In 2005, bread cost $1.00 per loaf, milk cost $1.50 per gallon, shirts cost $6.00 each, and pants cost $10.00 per pair. In 2006, bread cost $1.50 per loaf, milk cost $2.00 per gallon, shirts cost $7.00 each, and pants cost $12.00 per pair. Using 2005 as the base year, what was Aquilonia’s inflation rate in 2006? This question is stumping me. I thought that this answer was 124.4 but it seems that it is 24.4. I cant figure it outarrow_forward
- Year Price of a pound of Bacon (10 units) Price of a dozen Eggs (15 units) Price of a pound of Coffee (20 units) 1 $5.50 2 $5.25 $1.75 $2.00 $4.00 $4.50 3 $5.50 $2.00 $5.00 Use the information in the table above to calculate the CPI in Year 2, using Year 1 as the base year. Round to the nearest whole number. The Consumer Price Index isarrow_forwardThis table gives the monthly purchases of an average consumer in a small economy. Suppose 1977 is the reference base period unless stated otherwise. Item Quantity (1977) Clementines Burritos Bags of trail mix 90 Price (1977) 30 $0.10 $2.00 10 $1.00 $2.00 Find the total cost of the market basket for 1977 and 1978. Price (1978) What is the CPI in 1977 and 1978? $0.15 $2.25 Use the CPIs calculated in part b to find the inflation rate between 1977 and 1978. Recalculate the CPIs using 1978 as the base year. How does the inflation rate change?arrow_forwardThe following are the CPI values in Hong Kong for 2009 to 2014 (recorded in December): Year CPI 2009 100 2010 102.9 2011 108.8 2012 112.9 2013 117.7 2014 123.4 i) Calculate the inflation rate in 2010, 2011, 2012, 2013, and 2014. 11) What is the inflation rate from 2009 to 2014? iii) If you held $1,000,000 in a safety box at home starting in 2009, what would its present value be in 2014?arrow_forward
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