Calculate the CPI market basket and the percentage of the average household budget spent on juice in the reference base year.
In 2015, the average
... [Show More] household spent $64 on juice and $35 on cloth. The price of juice was $4 a bottle, and the price of cloth was $5 a yard.
In 2016, the price of juice is $3 a bottle and the price of cloth is $6 a yard
64/4= 16 bottles of juice
35/5= 7 yards of cloth
64+35= 99
64/99= 64.6% on juice
In 2015, the year of the Consumer Expenditure Survey and also the reference base year, the average household spent
$20 on juice and $25 on cloth.
The price of juice in 2015 was $2 a bottle, and the price of cloth was $5 a yard. In 2016, juice is $5 a bottle and cloth is $4 a yard.
Calculate the CPI in 2016 and the inflation rate between 2015 and 2016.
CPI= 5+2= 7
7/45= 155.6
inflation rate= 55.6 %.
Calculate the inflation rates in 2013 and 2014. Did the CPI rise or fall in 2014? Did the inflation rate increase or decrease in 2014?
year . cpi
2012 . 112
2013 . 114
2014 . 117
(114-112/114) * 100)= 1.8
(117-114/117) * 100)= 2.6
increase; increase
The United States experienced _______ in December 2015 because _______.
deflation; the CPI decreased
Of the items measured in the news clip, _______ has the highest weight in the CPI and _______ has the lowest weight in the CPI.
rents; medical care
In Canada, the reference base period for the CPI is 2002.
By 2014, prices had risen by 25.2 percent since the base period.
The inflation rate in Canada in 2015 was 1.1 percent.
Calculate the CPI in Canada in 2015.
1.1/100= .011
100+25.2= 125.2
(0.011 * 125.2) + 125.2 = 126.5772
In Brazil, the reference base period for the CPI is 2000.
By 2005, prices had risen by 51 percent since the base period. The inflation rate in Brazil in 2006 was 10 percent, and in 2007, the inflation rate was 9 percent.
Calculate the CPI in Brazil in 2006 and 2007. Brazil's CPI in 2008 was 173. Did Brazil's inflation rate increase or decrease in 2008?
10/100= .1
100+51= 151
(0.1 * 151) + 151= 166.1
166.1 * 1.09 = 181.0.
decreased
The table shows the quantities of the goods Suzie bought and the prices she paid during two consecutive weeks.
Suzie's CPI market basket contains the goods she bought in Week 1.
(screenshot of weeks)
$37.50 divided by $98.25) times 100, which is 38.2 percent of the CPI market basket.
The value of Suzie's CPI in Week 2 is= 93.25/98.25 * 100= 94.9
Suzie's inflation rate in Week 2 is= [(94.9-100)] / (100)] * 100= -5.1
Falling oil prices pushed the CPI down 0.1 percent in December 2015. Energy prices fell 2.4 percent and the price of gasoline fell by 3.9 percent.
Source: Los Angeles Times, January 20, 2016
Given the further information that the weight on energy prices in the CPI is 8 percent, by how much would the CPI have changed in December 2015 if energy prices had not changed?
If energy prices had not changed, the CPI in December 2015 would have _______.
increased by 0.09 percent
Falling oil prices pushed the CPI down 0.1 percent in December 2015. Energy prices fell 2.4 percent and the price of gasoline fell by 3.9 percent.
Source: Los Angeles Times, January 20, 2016
Given that energy prices are 8 percent of the CPI basket, by what percentage did the prices of other items in the CPI basket change?
risen by less than the fall in energy prices
The Consumer Price Index is a measure of the _____ of the prices paid by _____ consumers for a fixed market basket of consumption goods and services.
average; urban
The reference base period is a period for which the _____ is defined to equal _____. Currently, the reference base period is 1982-1984.
CPI; 100
The inflation rate is the percentage change in the _____ from one year to the next.
Deflation is a situation in which the _____ is _____ and the inflation rate is _____.
price level;
price level; falling; negative
A commodity substitution bias _______ when the CPI is calculated in 2016 using the 2015 basket.
exists; people switch from the relatively more expensive scallops to the relatively less expensive shrimp
The CPI that uses the 2015 basket _______ the inflation rate in 2016.
overstates the inflation rate in 2016
These three measures of the price level give different inflation rates because each measure _______.
is based on the prices of different baskets of goods and services
On the basis of these price observations, commodity substitution and outlet substitution might have occurred when consumers bought more ______ in July because they had become relatively ______ expensive.
steak and bread; less
bananas and lettuce; more
A cost of living index is a measure of the change in the amount of money that people need to spend to achieve a given _____.
standard of living [Show Less]