ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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2020
2021
Karaoke Machines
Quantity
10
12
Price
$40
60
CDs
Quantity
30
50
Price
$10
12
a. Using a method similar to the CPI, compute
the percentage change in the overall price level.
Use 2020 as the base year and fix the basket at
1 karaoke machine and 3 CDs.
b. Using a method similar to the GDP deflator,
compute the percentage change in the overall
price level. Again, use 2020 as the base year.
c. Is the inflation rate in 2021 the same using the two
methods? Explain why or why not.
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Transcribed Image Text:2020 2021 Karaoke Machines Quantity 10 12 Price $40 60 CDs Quantity 30 50 Price $10 12 a. Using a method similar to the CPI, compute the percentage change in the overall price level. Use 2020 as the base year and fix the basket at 1 karaoke machine and 3 CDs. b. Using a method similar to the GDP deflator, compute the percentage change in the overall price level. Again, use 2020 as the base year. c. Is the inflation rate in 2021 the same using the two methods? Explain why or why not.
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