Discuss the problems with the Consumer Price Index.    b) Consider a nation obsessed with Coke Studio. All they produce and consume are DVDs and karaoke mics, in the following amounts:   Karaoke Mics                                                   DVDs Quantity              Price                      Quantity             Price 2020                   10                 Rs.4,000                         30                 Rs.1,000 2021                   12                      6,000                         50                      1,200   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 3 DVDs and 1 karaoke mic.  Using a method similar to the GDP deflator, compute the percentage change in the overall price level. Again, use 2020 as the base year.  Is the inflation rate in 2021 the same using the two methods? Explain why or why not.

Notebooks Calculators Large coffees Energy drinks Textbooks Total cost Price index Quantity in Basket 10 1 300 75 8 Price Cost (Dollars) (Dollars) 3 30 75 75 600 150 720 NN 90 Suppose the base year for this price index is 2017. Between 2017 and 2018, the CSPI increased by 2017 1,575 100 Price (Dollars) 3 80 2 4 110 2018 Cost (Dollars) In the last row of the table, calculate and enter the value of the CSPI for the remaining years. Price (Dollars) 4 104 2 5 120 % Between 2018 and 2019, the CSPI increased by 2019 Cost (Dollars) % Which of the following, if true, would illustrate why price indexes such as the CSPI might overstate inflation in the cost of going to college? Check all that apply. A new type of personal transporter, which made it easier to get around places like university campuses, became available for purchase. Professors required each student to buy 10 notebooks, regardless of the price. As the price of energy drinks increased relative to the price of coffee between 2017…

Locate an example of the localized Atlanta/Sandy Springs/Roswell CPI that is performing better than the national CPI. State the two numbers you researched--local and national-- and forecast based on the October data how you think the November data will look for both local/national CPIs. Will the local CPI continue to perform better than national? Will it slow down to align with national? Locate an example of the localized Atlanta/Sandy Springs/Roswell CPI that is performing worse than the national CPI. State the two numbers you researched--local and national-- and forecast based on the October data how you think the November data will look for both local/national CPIs. Will the local CPI improve so that it is more in line with the national CPI?

Consider a fictional price index, the University Student Price Index (USPI), based on a typical university student's annual purchases. Suppose the following table shows information on the market basket for the USPI and the prices of each of the goods in 2016, 2017, and 2018. The cost of each item in the basket and the total cost of the basket are shown for 2016. Perform these same calculations for 2017 and 2018, and enter the results in the following table. 2016 2017 2018 Price (Dollars) Cost (Dollars) Price (Dollars) Cost (Dollars) Quantity in Basket Notebooks 10 3 30 3 Calculators 1 75 75 80 Large coffees 300 2 600 2 Energy drinks 75 2 150 4 Textbooks 8 90 720 110 Total cost 1,575 100 Price index Suppose the base year for this price index is 2016. In the last row of the table, calculate and enter the value of the USPI for the remaining years. Between 2016 and 2017, the USPI increased by %. Between 2017 and 2018, the USPI increased by % Which of the following, if true, would…

A Consumer Expenditure Survey in Sparta shows that people buy only juice and cloth. In 2015, the year of the Consumer Expenditure Survey and also the reference base year, the average household spent $27 on juice and $20 on cloth. The price of juice in 2015 was $3 a bottle, and the price of cloth was $5 a yard. In 2016, juice is $5 a bottle and cloth is $4 a yard. Calculate the CPI in 2016 and the inflation rate between 2015 and 2016. The CPI in 2016 is >>> Answer to 1 decimal place. The inflation rate between 2015 and 2016 is percent. >>> Answer to 1 decimal place. >>> If your answer is negative, include a minus sign. If your answer is positive, do not include a plus sign.

Consider a simple economy that produces two goods: pencils and envelopes. The following table shows the prices and quantities of the goods over a three-year period. Price Year (Dollars per pencil) 2016 2 2017 4 2018 2 Year 2016 2017 2018 Pencils Use the information from the preceding table to fill in the following table. From 2017 to 2018, nominal GDP Quantity (Number of pencils) 125 135 125 The inflation rate in 2018 was Nominal GDP Real GDP (Dollars) (Base year 2016, dollars) GDP Deflator Price (Dollars per envelope) 3 3 3 and real GDP Envelopes Why is real GDP a more accurate measure of an economy's production than nominal GDP? Quantity (Number of envelopes) 155 O Real GDP includes the value of exports, but nominal GDP does not. Real GDP is not influenced by price changes, but nominal GDP is. Real GDP does not include the value of intermediate goods and services, but nominal GDP does. 210 165

A Consumer Expenditure Survey in Sparta shows that people buy only juice and cloth. In 2015, the year of the Consumer Expenditure Survey and also the reference base year, the average household spent $20 on juice and $12 on doth The price of juice in 2015 was $2 a bottle, and the price of doth was 54 a yard. In 2016, juice is $6 a bottle and cloth is $3 a yard Calculate the CPI in 2016 and the inflation rate between 2015 and 2016. The CPI in 2016 is >> Answer to 1 decimal place.