In the year 2000, the CPI was 172.2 and the GDP deflator was 78.7. In 2019, the CPI had risen to 258.4 and the GDP deflator to 112.5. a. How much did prices increase from 2000 to 2019 according to the CPI and how much according to the GDP deflator? Why is there a difference? b.  If the price of a 12oz can of Coke was $1.25 in 2000 and the price was $1.75 in 2019, did the real price of Coke go up, down, or stay the same? Explain your answer.

b. Suppose that only two goods are produced in an economy. The prices in 2020 and 2021 are given in the following table: 2020 2021 Price of apples 2£ 2.1£ Price of laptops 700£ 750£ The typical basket of the country consists in the consumption of 10,000,000 applies and 30,000 computers. Calculate the CPI of the economy in 2020 and 2021 and the inflation rate in 2021.

The consumer price index for selected years is shown in the following table. Year CPI Year CPI 2017 245.168 2013 232.957 2016 240.008 2012 229.594 2015 237.017 2011 224.939 2014 236.736 2010 218.056 Suppose Lois's salary in 2010 was $52,000, $57,000 in 2014, and $65,000 in 2016. Using the values of the CPI from the table, find her salaries in constant 2015 dollars. (Round your answers to the nearest cent.) $52,000 2015 dollars $57,000 $65,000 2015 dollars 2015 dollars

The information on price and quantity of three products consumed by a typical household in the year 2020 and 2021 is given by the table below 2020 2021 Price Quantity Quantity 10 Price $5.50 Fish 12 $5 $10 Beef 5 $11 4 Train Ride $8 20 $9 22 Using 2020 as the base year, measure the CPI for 2021 and the inflation rate in 2021. Does this inflation rate correctly measure the cost of living changes for households in 2021? Explain. "The transfer payment does not have any effect on the gross domestic product of an economy". Discuss the validity of this statement.

In 1980 the price of a microwave oven was $450 and CPI was 82. Today the price of a microwave overn is $100 and CPI is 259. Round to two decimal places. What is the 1980 price of a microwave oven measured in todays dollars? S What is todays price of a microwave oven measured in 1980 dollars? $

3. In a small community, breakfast is the most important meal of the day. Therefore, the only two goods that this community produces are coffee and scones in the following amounts: Year 2020 2021 Quantity 60 cups 90 cups Coffee Price $1.25 $1.45 Quantity 45 units 65 units Scones Price $2.10 $3.95 a) Calculate the inflation rate for 2021 using the GDP deflator method (assume that 2020 is the base year for real GDP calculations). Show your work. b) Calculate the inflation rate for 2021 using the CPI method (assume that 2020 is the base year for CPI calculations). Additionally, assume that the consumption basket for both years contains only 10 cups of coffee and 40 scones. Show your work. c) Compare the results of both inflation calculations and explain why they are similar or different based on the two methods and on the specific data used in this example.

What information is given by the CPI?   The CPI tells us _______.     A. the price level in a given period expressed as a percentage of the price level in the base period, which equals zero   B. the price level in a given period expressed as a percentage of the price level in the base period, which equals 100   C. the inflation rate in a given period compared to the inflation rate in the base period, which equals 100   D. the inflation rate in a given period compared to the inflation rate in the base period, which equals zero

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