Econ Macro (book Only)
6th Edition
ISBN: 9781337408745
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 10, Problem 2P
To determine
Real wage rate and nominal wage rate.
Concept Introduction:
Real wage rate: Inflation is the rate at which the commonprice level for goods and services are increasing.
Nominal wage rate: Nominal wage is the money wage received by the labor. It is not adjusted to inflation.
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Students have asked these similar questions
Year 2019
Product Quantity
Apples 10
Bananas 17
Your Answer:
Average Price
per Unit
Answer
$5
$20
'
Year 2020
Quantity
6
7
Average Price
per Unit
Using year 2020 as the base year, the economy's consumer price index (CPI) in
year 2019 is
(Your answer should include the first decimal point, if any.)
$16
$24
17) Consider a simple economy that produces only three products. Use the information in the following table to
calculate the inflation rate for 2006 as measured by the consumer price index taking the 1999 as the base year:
"
1999 2005 2006
PRICE PRICE
11
16.2
PRODUCT QUANTITY PRICE
Haircuts
Hamburgers
DVDs
2
10
6
10
2
15
2.45
15
2.4
14
[economics] could u please find the inflation rate using CPI and GDP deflator respectively? thx!
Chapter 10 Solutions
Econ Macro (book Only)
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- Problem 3: Again, consider the country of Opalia that produces two goods: footballs and basketballs. Below is a table showing prices and quantities of common consumer purchases for the past three years: Price of Footballs Price of Basketballs Qd Footballs Qd Basketballs Year Year 1 10 12 33 4 Year 2 12 4 15 Year 3 18 14 a) Compute the CPI index (using year 1 as the base). b) Compute the inflation rate. c) Compare the answer to part b) and the answer you found for problem 1, part d)? What is the origin of the difference?arrow_forwardPerform these same calculations for 2018 and 2019, and enter the results in the following table. 2017 2018 2019 Price Cost Price Cost Price Cost Quantity in Basket (Dollars) (Dollars) (Dollars) (Dollars) (Dollars) (Dollars) Notebooks 10 20 1 3 Calculators 1 50 50 54 75 Large coffees 200 1 200 1 1 Energy drinks 100 200 4 Textbooks 10 100 1,000 120 150 Total cost 1,470 Price index 100 Suppose the base year for this price index is 2017. In the last row of the table, calculate and enter the value of the CSPI for the remaining years. Between 2017 and 2018, the CSPI increased by Between 2018 and 2019, the CSPI increased by % 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. As the price of energy drinks increased relative to the price of coffee between 2017 and 2019, students decreased their consumption of energy drinks and increased their consumption of coffee. Professors…arrow_forward3. 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.arrow_forward
- a) Consider the following consumption data for the economy of Ruthenia: Quantity Prices 2021 $5.55 $420 $12500 $0.36 Item Price 2022 $4.65 Pizzas 1500 Computers 120 $480 $15200 $0.44 $35 $47 Cars 39 Apples Massages Accounting Services 7800 420 $31 190 Calculate the CPI for both years as well as the inflation rate. $49arrow_forward1- Identify the graph if it is cost-push or demand-pull inflation. 2- Propose the Fiscal Policy needed to fix this economy.arrow_forwardCongratulations! Your boss has given you a raise. However, you want to know whether your purchasing power has increased, since inflation is also rising. The table below gives you data for wages and the Consumer Price Index (CPI) for the last two years. Wage ($/day) CPI Year 1 $ 2000 CPI 120 Year 2 $2200 CPI 129.6 The nominal percentage increase in your wage is enter your response here%. (Round your answer to one decimal place.) Part 2 The real percentage increase in your wage is enter your response here%. (Round your answer to one decimal place.)arrow_forward
- Consider a fictional price index, the College Student Price Index (CSPI), based on a typical college student's annual purchases. Suppose the following table shows information on the market basket for the CSPI and the prices of each of the goods in 2017, 2018, and 2019. The cost of each item in the basket and the total cost of the basket are shown for 2017. Perform these same calculations for 2018 and 2019, and enter the results in the following table. 2017 2018 2019 Price Cost Price Cost Price Cost Quantity in Basket (Dollars) (Dollars) (Dollars) (Dollars) (Dollars) (Dollars) Notebooks 10 3 30 3 4. Calculators 1 75 75 80 104 Large coffees 300 2. 600 2. 2 Energy drinks 75 150 4 Textbooks 8 90 720 110 120 Total cost 1,575 Price index 100 Suppose the base year for this price index is 2017, In the last row of the table, calculate and enter the value of the CSPI for the remaining years. Between 2017 and 2018, the CSPI increased by F %. Between 2018 and 2019, the CSPI increased by Which of…arrow_forwardQUESTION 3 You are given the following as it relates to the price of a tin of milk in Adam Island, 2018 to 2022: 2018- $1.30 2019 - $1.35 2020 - $1.40 2021 - $1.45 2022- $1.50 Using 2020 as the base year, calculate the index for 2018, 2019, 2020, 2021 and 2022. NB Index = (current price/base price) times 100. Also the value of the index IS NOT stated as a percentage. It is just the value you get from the calculation. Round to 1 decimal place,arrow_forward[Consider the effects of an increase in the global price of oil. For a country such as Australia, which is a net exporter of oil, this development will imply that the CPI will increase roughly by the same amount as the increase in the GDP deflator.arrow_forward
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