EBK ECONOMICS TODAY
18th Edition
ISBN: 9780133920116
Author: Miller
Publisher: YUZU
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Chapter 7, Problem dFCT
To determine
To show:
The reason for which comparing the 2015
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Suppose the current CPI is 252 and in 2005 it was 196. A pair of Levi's jeans costs $43 today. Based
on the CPIs, what would you expect the 2005 price to have been for the same style of Levis, in a
similar retail outlet? Round your answer to two decimal places.
0
$
Click or tap the numbers or use your keyboard to type. If you're not sure, just take a guess.
1 2 3 4 5
6 7 8 9
Done
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 is
Year
Price of a pound of Bacon (10 units)
Price of a dozen Eggs (15 units) Price of a pound of Coffee (20 units)
$5.50
$1.75
$4.00
$5.25
$2.00
$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.
Chapter 7 Solutions
EBK ECONOMICS TODAY
Ch. 7 - Prob. 7.1LOCh. 7 - Prob. 7.2LOCh. 7 - Prob. 7.3LOCh. 7 - Prob. 7.4LOCh. 7 - Prob. 7.5LOCh. 7 - Prob. aFCTCh. 7 - Prob. bFCTCh. 7 - Prob. cFCTCh. 7 - Prob. dFCTCh. 7 - Prob. eFCT
Ch. 7 - Prob. 1CTQCh. 7 - Prob. 2CTQCh. 7 - Prob. 1FCTCh. 7 - Prob. 2FCTCh. 7 - Prob. 1PCh. 7 - Prob. 2PCh. 7 - Prob. 3PCh. 7 - Prob. 4PCh. 7 - Prob. 5PCh. 7 - Prob. 6PCh. 7 - Prob. 7PCh. 7 - Prob. 8PCh. 7 - Prob. 9PCh. 7 - Prob. 10PCh. 7 - Prob. 11PCh. 7 - Prob. 12PCh. 7 - Prob. 13PCh. 7 - Prob. 14PCh. 7 - Prob. 15PCh. 7 - Prob. 16P
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- The 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_forwardThe following Table 2 gives the consumer price index from year 2012 to 2017. (i) Compute CPI for year 2015 by using year 2005 as the base year. (ii) Compute CPI for year 2012 by using year 2014 as the base year. (iii)Construct another index series using 2016 as the base year and interpret the index number for the year 2017.arrow_forwardThe CPI (using a 2000 base year) for 1965 is 26.0. Suppose a household's annual take-home pay in 1965 was $8,320. What would be an equivalent take-home pay in 2000?arrow_forward
- As a first step in computing the consumer price index (CPI), a survey of consumers is done to determine the “basket of goods” purchased by a typical consumer. Suppose that 2009 is given as the base year and, consistent with the data shown in the table above, it was decided that the basket of goods in this economy should consist of one unit of food and two units of clothing. I. Using 2009 as the base year,what is the CPI in each year: 2009, 2010, and 2011? ii. What is the inflation rate in 2010 and 2011?arrow_forwardSuppose the current CPI is 252 and in 2005 it was 196. A pair of Levi’s jeans costs $43 today. Based on the CPIs, what would you expect the 2005 price to have been for the same style of Levis, in a similar retail outlet?arrow_forwardWhat are two different types of CPIs kept by the Bureau of Labor and Statistics?arrow_forward
- Calculate the CPI for 2017arrow_forwardWhat is the relationship between GDP, inflation, and CPI?arrow_forwardTwo countries, Country N in North America and Country S in South America, have the same CPI basket. Year 2000 is the CPI base year for both countries. In that year, the cost of CPI basket in Country N is $N100, and in country S is $s1000, where $N and $s are their respective currencies. Twenty years later, in 2020, the CPI in Country N rose to 240, and in Country S to 360. a) In the ideal world in which the purchasing power parity (PPP) holds true, what should be the nominal exchange between $s and $N in Year 2000 and in Year 2020. Show calculations and explain the change in nominal exchange rate. b) Suppose in reality, the nominal exchange rage between the two currencies is 18 $s per $N in Year 2020. First, explain why the nominal exchange rate differs from your calculation above. Second, calculate the real exchange rate between the two countries, and explain the meaning of your calculated result. c) During Year 2021, the growth of the real GDP in the two countries are, 0% in country…arrow_forward
- Consumers of the economy purchase all primary products, manufacturing products and services shown in the table. Manufacturing products and services are all produced by the domestic economy. However, for each year, 3/4 of the primary products is imported, and 1/4 is produced domestically. Set 1973 as the base year.Find the % change in prices for primary products, manufacturing products and services, respectively, from 1973 to 1974. Find the CPI for both years. Calculate the corresponding inflation rate from 1973 to 1974. Find the nominal and real GDP for both years. Hence, find the GDP deflator for both years. Calculate the corresponding inflation rate from 1973 to 1974. The above table is set up in such a way to mimic the actual data of the inflation rates calculated from the CPI and the GDP deflator, respectively, for the US during the first oil crisis in 1973- 1974. Use your results to explain how and why the two numbers differ by such a wide margin during that period.arrow_forwardThe CPI is used to measure the cost of a typical basket of goods. The typical household in the nation of Jaskson buys 4 loaves of bread, 3 pounds of cream cheese, and 8 books each week. The prices of these goods in years 2015-2017 are given the table below: Price of a Year loaf of bread 2015 $1 2016 $2 2017 $3 Price of a lb of cream cheese $3 $6 $6 Price of a book $10 $20 $25 • Calculate the CPI in 2015, using 2016 as the base year. (Enter your answer as an Integer)arrow_forwardBelow 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%arrow_forward
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