Macroeconomics (6th Edition)
6th Edition
ISBN: 9780134106229
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Question
Chapter 15, Problem 15.3RDE
(a):
To determine
Calculation of inflation rate using PCE and
(b):
To determine
Identify which of three measures of inflation was highest during the year.
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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 2018, 2019, and 2020.
The expenditure on each item in the market basket and the total dollar expenditure on market basket are shown for 2018.
Perform these same calculations for 2019 and 2020, and enter the results in the following table.
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100
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2
100
2018
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(Dollars) (Dollars)
7
50
100
150
100
1,000
1,400
100
110
1
3
120
2019
In the last row of the table, calculate and enter the value of the CSPI for the remaining years.
Price
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11
% Between…
Consider an economy that produces and consumes bread and automobiles. In the following table are data for two different years.
Year
2000
2010
Price of an automobile
$40,000
$50,000
Price of a loaf bread
$20
$30
Number of auto-mobiles produced
100 cars
120 cars
Number of loaves of bread produced
600,000 loaves
500,000 loaves
Using the year 2000, compute the following statistics for each year: nominal GDP, real GDP, the implicit price deflator for GDP, and a fixed-weight price index such as CPI.
How much have prices risen between year 2000 and year 2010? Compare answers given by Laspeyres and Passche price indices.
Suppose you are a senior public servant writing a bill to index Social Security and pensions. That is your bill will adjust these benefits to offset changes in the cost of living. Will you use the GDP deflator or the CPI? Explain
emphasis on questions 2 and 3 .
The consumer price index (CPI) is a fixed-weight index. It compares the price of a fixed bundle of goods
one year with the price of the same bundle of goods in some base year. Calculate the price of a bundle
containing 100 units of good X, 150 units of good Y, and 25 units of good Z in 2008, 2009, and 2010.
Convert the results into an index by dividing each bundle price figure by the bundle price in 2008.
Calculate the percentage change in your index between 2008 and 2009 and again between 2009 and
2010.Was there inflation between 2009 and 2010?
QUANTITY
CONSUMED
2008
PRICES
2009
PRICES
2010
PRICES
GOOD
100
$1.00
$1.50
$1.75
Y
150
1.50
2.00
2.00
25
3.00
3.25
3.00
Chapter 15 Solutions
Macroeconomics (6th Edition)
Ch. 15 - Prob. 15.1.1RQCh. 15 - Prob. 15.1.2RQCh. 15 - Prob. 15.1.3RQCh. 15 - Prob. 15.1.4RQCh. 15 - Prob. 15.1.5PACh. 15 - Prob. 15.1.6PACh. 15 - Prob. 15.1.7PACh. 15 - Prob. 15.1.8PACh. 15 - Prob. 15.2.1RQCh. 15 - Prob. 15.2.2RQ
Ch. 15 - Prob. 15.2.3RQCh. 15 - Prob. 15.2.4RQCh. 15 - Prob. 15.2.5PACh. 15 - Prob. 15.2.6PACh. 15 - Prob. 15.2.7PACh. 15 - Prob. 15.2.8PACh. 15 - Prob. 15.3.1RQCh. 15 - Prob. 15.3.2RQCh. 15 - Prob. 15.3.3RQCh. 15 - Prob. 15.3.4PACh. 15 - Prob. 15.3.5PACh. 15 - Prob. 15.3.6PACh. 15 - Prob. 15.3.7PACh. 15 - Prob. 15.3.8PACh. 15 - Prob. 15.3.9PACh. 15 - Prob. 15.3.10PACh. 15 - Prob. 15.3.11PACh. 15 - Prob. 15.3.12PACh. 15 - Prob. 15.3.13PACh. 15 - Prob. 15.3.14PACh. 15 - Prob. 15.4.1RQCh. 15 - Prob. 15.4.2RQCh. 15 - Prob. 15.4.3PACh. 15 - Prob. 15.4.4PACh. 15 - Prob. 15.4.5PACh. 15 - Prob. 15.4.6PACh. 15 - Prob. 15.5.1RQCh. 15 - Prob. 15.5.2RQCh. 15 - Prob. 15.5.3RQCh. 15 - Prob. 15.5.4PACh. 15 - Prob. 15.5.5PACh. 15 - Prob. 15.5.6PACh. 15 - Prob. 15.5.7PACh. 15 - Prob. 15.5.8PACh. 15 - Prob. 15.5.9PACh. 15 - Prob. 15.6.1RQCh. 15 - Prob. 15.6.2RQCh. 15 - Prob. 15.6.3PACh. 15 - Prob. 15.6.4PACh. 15 - Prob. 15.6.5PACh. 15 - Prob. 15.6.6PACh. 15 - Prob. 15.6.7PACh. 15 - Prob. 15.6.8PACh. 15 - Prob. 15.6.9PACh. 15 - Prob. 15.1RDECh. 15 - Prob. 15.2RDECh. 15 - Prob. 15.3RDE
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