ECO 202 Q5

What was the inflation rate between 2015 and 2016?

13.7%

What was the inflation rate between 2016 and 2017?

18.5%

Use the following information to answer questions 1-6. This information will be repeated at the beginning of each question. The country of Fabrica produces and consumes textile goods. The typical Fabrican consumer buys 12 towels, 24 shirts and 5 bottles of fabric softener. Here is the data regarding the prices these goods from 2015 to 2018: 2015: Towels -- Price = $12 Shirts -- Price = $9 Bottles of Fabric Softener -- Price = $1.50 2016: Towels -- Price = $14 Shirts -- Price = $10 Bottles of Fabric Softener -- Price = $2 2017: Towels -- Price = $16 Shirts -- Price = $12 Bottles of Fabric Softener -- Price = $3 2018: Towels -- Price = $18 Shirts -- Price = $12 Bottles of Fabric Softener -- Price = $3 What is the cost of the basket in each year?

2015 = $367.50; 2016 = $418; 2017 = $495; 2018 = $519

Using 2015 as your base year, what is the CPI for each year?

2015 = 100; 2016 = 113.7; 2017 = 134.7; 2018 = 141.2

What was the inflation rate between 2017 and 2018?

4.8%

What was the inflation rate between 2015 and 2018?

41.2%

Which of the following are problems in measuring the CPI?

Introduction of new goods

A movie released in 1930 had a $10 million box office, a movie release in 1980 had a $50 million box office, and a movie release in 2000 had a $60 million box office. Which one had the bigger box office?

The 1930 movie did better.

A classic 1950 sci-fi film got a $90 million dollar box office. Studio execs tried to turn it into a TV series in 1970, but it never aired and they decided to turn the pilot episode into a movie, which made $20 million. Eventually, the classic was remade in 2000 with a bigger budget, high-tech computerized special effects, and edgy writing. It was almost universally disliked by critics, but it did make $400 million. Which one had the bigger box office?

The 2000 remake.

Suppose the minimum wage was $5/hr in 1970 and automatically adjusted for inflation. How much would the minimum wage be in 2000?

$10/hr

Use the following price levels to answer questions 7-10. This information will be repeated at the beginning of each question: 1920 = 20 1930 = 25 1940 = 40 1950 = 60 1960 = 80 1970 = 100 1980 = 140 1990 = 180 2000 = 200 Suppose a manager made $40,000 in 1920. How much would this be in year 2000 dollars?

$400,000