Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Textbook Question
Chapter 22, Problem 2SCQ
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Students have asked these similar questions
Suppose that before the end of the year a typical consumer purchased 125 apples,
60 bananas, and 85 oranges.
Year 1
Year 2
Price of apple
Price of banana
0.75 $
0.90
0.20
0.45
Price of orange
24
0.25 $
0.60
What is the price index for year 2, using year 1 as the base year (round to the nearest
full number)?
The Consumer Price Index (CPI) is a measure of the
average change in price over time from a designated
reference period, at which it equals 100. The index is
based on prices of basic consumer goods and services.
The table provided lists the CPI for several years from
1960 to 2012. If the price change in cars parallels the
change in the CPI, what would a car sell for (to the
nearest dollar) in 2012 if a comparable model sold for
$7,500 in 1999?
Year
CPI
1960
29.6
1973
1986
44.4
109.6
156.9
1999
2012
229.6
In 2012, a car would sell for approximately $ 58,176
(Round to the nearest dollar.)
Britney is a baseball fan and attends several games per season. Her expenses per
season are listed in the table below:
Year
2
Year 1
5
Baseball $500$560
Tickets
Jersey
$120 $150
$150 $160
Food
Transport $60 S$70
Assuming that year 1 is the base year, calculate the price index for year 1 and for
year 2.
100, 113
100, 88
88, 113
88, 100
Chapter 22 Solutions
Principles of Economics 2e
Ch. 22 - Table 22.4 shows the fruit prices that the typing...Ch. 22 - Construct the price index for a fruit basket in...Ch. 22 - Compute the inflation rate for fruit prices from...Ch. 22 - Edna is living in a retirement home where home...Ch. 22 - How to Measure Changes in the Cost of Living...Ch. 22 - The Consumer Price Index is subject to the...Ch. 22 - Go to this website...Ch. 22 - If inflation rises unexpectedly by 5, would a...Ch. 22 - How should an increase in inflation affect the...Ch. 22 - A fixed-rate mortgage has the same interest rate...
Ch. 22 - How do economists use a basket of goods and...Ch. 22 - Why do economists use index numbers to measure the...Ch. 22 - What is the difference between the price level and...Ch. 22 - Why does substitution bias arise if we calculate...Ch. 22 - Why does the quality/new goods bias arise if we...Ch. 22 - What has been a typical range of inflation in the...Ch. 22 - Over the last century, during what periods was the...Ch. 22 - What is deflation?Ch. 22 - Identity several parties likely to he helped and...Ch. 22 - What is indexing?Ch. 22 - Name several forms of indexing in the private and...Ch. 22 - Inflation rates, like most statistics, are...Ch. 22 - Given the federal budget deficit in recent years,...Ch. 22 - Why is the GDP deflator not an accurate measure of...Ch. 22 - Imagine that the government statisticians who...Ch. 22 - Describe a situation, either a government policy...Ch. 22 - Describe a situation, either a government policy...Ch. 22 - Why do you mink the U.S. experience with inflation...Ch. 22 - If, over time, wages and salaries on average rise...Ch. 22 - Who in an economy is the big winner from...Ch. 22 - If a government gains from unexpected inflation...Ch. 22 - Do you think perfect indexing is possible? Why or...Ch. 22 - The index number representing the price level...Ch. 22 - The total price of purchasing a basket of goods in...Ch. 22 - With in 1 or 2 percentage points, what has the...Ch. 22 - If inflation rises unexpectedly by 5, indicate for...Ch. 22 - Rosalie the Retiree knows that when she retires in...
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Similar questions
- Suppose that the index of wholesale-to-retail beef price index for 2018 was 1.35 and the base year of this index was 2006. Relative to 2006, beef prices in 2018 were higher(lower) and by how much?arrow_forwardIf the base year is 1970 and the 2016 price index is 135, purchases of $7,000 of goods in the base year would cost $___ for the same goods in 2016. (Round your response to the nearest whole number.)arrow_forwardDiscuss the Price Index most commonly used in your country. How is it calculated?arrow_forward
- Year Units of Output Price per unit 8 1 2 3 4 5 If year 2 is the base year, what is the consumer price index for year 1? 10 15 18 20 4 5 6 3 4arrow_forwardCalculate the inflation rate using the GDP deflator based on the Laspeyres, Paasche, and chain- weighted indexes of GDP (use the approximate formula).arrow_forwardA price index does not measure transportation costs? True or Falsearrow_forward
- Setting 2018 as the base year Using the consumer price index a). Calculate the inflation rate between 2018 and 2019 b)Determine the purchasing power of the Ghana Cedi in 2019 and interpret itarrow_forwardThe average price of tuition and fees at private 4-year colleges and universities increased from $8,300 in 1991 to $23,000 in 2006. Calculate the relative change in price from 1991 to 2006 and compare it to the overall rate of inflation as measured by the Consumer Price Index. Average tuition and fees in private 4-year colleges and universities increased by ■%. (Round to the nearest integer as needed.) Average Annual Consumer Price Index (CPI) (1982- 1984=100) Year CPI Year CPI Year CPI 1976 56.9 1989 124.0 2001 177.1 1977 60.6 1990 130.7 2002 179.9 1978 65.2 1991 136.2 2003 184.0 1979 72.6 1992 140.3 2004 188.9 1980 82.4 1993 144.5 2005 1981 90.9 1994 148.2 2006 1982 96.5 1995 152.4 2007 1983 99.6 1996 156.9 1984 103.9 1997 160.5 2009 1985 107.6 1998 163.0 2010 109.6 1999 166.6 2011 1986 1987 113.6 2000 172.2 2012 1988 118.3 195.3 201.6 207.3 2008 215.3 214.5 218.1 224.9 229.6arrow_forwardUsing 2016 as the base year, calculate the Laspeyre’s Price Index for 2021. A 135.60B 66.73C 138.44D 149.86arrow_forward
- In an economy, the total expenditure for a market basket of goods in year 1 ( the base year) was $4000. In year 2, the total expenditure for the same basket of goods was $ 4000. What was the price index for the economy in year 1? Year 2?arrow_forwardC I G NX Price Yr1 1000 156 560 52 4 Yr2 1300 159 600 52 5 Yr3 2000 169 690 53 6 Yr4 2900 180 880 53 7 Using the information above - State what the price index will be for all four years (round to the whole number for all calculations and final answers) - State what real GDP will be for all four years.arrow_forwardWhy is the consumer price index not a good measure of industrial price increases?arrow_forward
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