Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN: 9781337091985
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 6, Problem 1PA
To determine
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The "pizza connection" refers to the observation that in a major city, the cost of a slice of pizza is always about the same as the subway fare. Using the CPI values from the table
shown below and the CPI table, determine what a slice of pizza should have cost in 2009 if it cost $1.00 in 1984 and prices had risen with the CPI. What does this tell you about how
actual pizza prices changed compared to the CPI?
1984 1993 1997
2002
Year
Pizza Cost
2008 2011 2015
2.50 2.75 2.80
1.00
1.25
1.50
2.00
1.00
1.15
2.00
2.60 2.85
3.05
Subway fare
CPI
1.40
144.5 160.5 179.9 215.3 224.9
103.9
237.0
Click to view the CPI Table.
A slice of pizza should have cost $ in 2009 if it cost $1.00 in 1984 and prices had risen with the CPI.
(Round to the nearest cent as needed.)
Data table
C
Year
1976 56.9
1977 60.6
1978 65.2
1979 72.6
1980 82.4
1981 90.9
1982 96.5
1983 99.6
1984 103.9
1985 107.6
Average Annual Consumer Price Index (1982-1984=100)
CPI
CPI
Year
CPI
1996 156.9
Year
1986
109.6
1987 113.6
1988 118.3…
The weight of the item such as food or housing will determine the effect of price changes on CPI
TRUE
FALSE
"The cost of an average ticket to a baseball game in 1955 was $2.19. In 2010, the
average price of a baseball ticket was $29.61. If the ticket price in 1955 rose at the
same rate as inflation, what is the difference in prices between the 1955 ticket price
(in 2010 dollars) and the actual ticket price in 2010? Enter your answer as a positive
number.
Refer to the instructions in the quiz for a link to the CPI table to answer this question."
Chapter 6 Solutions
Brief Principles of Macroeconomics (MindTap Course List)
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Similar questions
- The "pizza connection" refers to the observation that in a major city, the cost of a slice of pizza is always about the same as the subway fare. Using the CPI values from the table shown below and the CPI table, determine what a slice of pizza should have cost in 2009 if it cost $1.00 in 1984 and prices had risen with the CPI. What does this tell you about how actual pizza prices changed compared to the CPI? Year 1984 1993 1997 2002 2008 2011 2015 1.00 1.25 1.50 2.00 2.50 2.75 2.80 1.00 1.15 1.40 2.00 2.60 2.85 3.05 103.9 Click to view the CPI Table. Pizza Cost Subway fare CPI 144.5 160.5 179.9 215.3 224.9 237.0 ← A slice of pizza should have cost $ in 2009 if it cost $1.00 in 1984 and prices had risen with the CPI. (Round to the nearest cent as needed.)arrow_forwardUse the information in the table to calculate a consumer price index (CPI) and the inflation rate. The base year is 1975. Round answers to two decimal places. Market basket Quantity 1975 prices 1976 prices A dozen eggs 29 $1.10 $1.70 Calculator 19 $15.00 $17.00 Microwave oven 9 $180.00 $230.00 What is the CPI for 1975?arrow_forwardSuppose the current CPI is 252 and in 2005 it was 196. A pair of Levi's jeans costs $43 today. Based on the CPIs, what would you expect the 2005 price to have been for the same style of Levis, in a similar retail outlet? Round your answer to two decimal places. 0 $ Click or tap the numbers or use your keyboard to type. If you're not sure, just take a guess. 1 2 3 4 5 6 7 8 9 Donearrow_forward
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- The following are the CPI values in Hong Kong for 2009 to 2014 (recorded in December): Year CPI 2009 100 2010 102.9 2011 108.8 2012 112.9 2013 117.7 2014 123.4 i) Calculate the inflation rate in 2010, 2011, 2012, 2013, and 2014. 11) What is the inflation rate from 2009 to 2014? iii) If you held $1,000,000 in a safety box at home starting in 2009, what would its present value be in 2014?arrow_forwardCongratulations! Your boss has given you a raise. However, you want to know whether your purchasing power has increased, since inflation is also rising. The table below gives you data for wages and the Consumer Price Index (CPI) for the last two years. Wage ($/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_forwardSuppose we have the following consumer price index (CPI) data for a nation: Year CPI 2016 223.40 2017 215.31 2018 224.35 Calculate the inflation rate from 2016 to 2017. Answer this as a percentage and round your answer to two digits after the decimal without the percentage. ex. If you found the inflation rate to be 5.125%, answer 5.13.arrow_forward
- In Virtual Reality, time travel became possible only in 3006. Economists in the Statistics Bureau decided to conduct a Consumer Expenditure Survey in 3005. The table shows the results of the survey. It shows the items that consumers buy and their prices. The Statistics Bureau fixes the reference base year as 3005. Calculate the CPI in 3006 and the inflation rate measured by the CPI in 3006. >>> Answer to 1 decimal place. The CPI in 3006 using the 3005 CPI market basket is nothing. The inflation rate in 3006 using the 3005 CPI market basket is nothing percent. 3005 3006 Item Quantity Price Quantity Price Games 20 $40 15 $90 Time travel 0 - 10 $8,000arrow_forwardYou know that the consumer price index (CPI) at the beginning of this year was 150 and the rate of inflation was 8%; this would mean the CPI at the end of the year wasarrow_forwardThe biggest problem with constructing the CPI is that the basket of goods that the typical consumer buys keeps changing. the monetary base keeps changing the velocity of money is constant the base year is arbitraryarrow_forward
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