ENC 222 Homework 2
David earned a salary of $43,500 in 1994 and $89,000 in 2010. The consumer price index was 148.2 in 1994 and 215.3 in 2010. David's 1994 salary in 2010 dollars is
$63,195.34
The consumer price index is
a useful measure, but not a perfect measure, of the cost of living.
When the consumer price index falls, the typical family
can spend fewer dollars to maintain the same standard of living.
Table 24-2 The table below pertains to Pieway, an economy in which the typical consumer's basket consists of 15 bushels of peaches and 10 bushels of pecans. 2012 $11 peach bushel $6 pecan bushel 2013 $9 peach bushel $10 pecan bushel If 2012 is the base year, then the CPI for 2012 was
100.0.
Suppose a basket of goods and services has been selected to calculate the CPI and 2012 has been selected as the base year. In 2012, the basket's cost was $50; in 2014, the basket's cost was $51; and in 2016, the basket's cost was $52. The value of the CPI in 2014 was
102.0.
The price index was 128 in 2013, and the inflation rate was 24 percent between 2012 and 2013. The price index in 2012 was
103.2.
Table 24-2 The table below pertains to Pieway, an economy in which the typical consumer's basket consists of 15 bushels of peaches and 10 bushels of pecans. 2012 $11 peach bushel $6 pecan bushel 2013 $9 peach bushel $10 pecan bushel The cost of the basket in 2012 was
$225.
Table 24-2 The table below pertains to Pieway, an economy in which the typical consumer's basket consists of 15 bushels of peaches and 10 bushels of pecans. 2012 $11 peach bushel $6 pecan bushel 2013 $9 peach bushel $10 pecan bushel The cost of the basket in 2013 was
$235.
A worker received $5 for a daily wage in 1930. What is the value of that wage today if the CPI was 17 in 1930 and is 230 today?
$67.65
If the nominal interest rate is 4 percent and the real interest rate is 7 percent, then the inflation rate is
-3 percent.
Table 24-2 The table below pertains to Pieway, an economy in which the typical consumer's basket consists of 15 bushels of peaches and 10 bushels of pecans. 2012 $11 peach bushel $6 pecan bushel 2013 $9 peach bushel $10 pecan bushel If 2013 is the base year, then the CPI for 2013 was
100.0
Table 24-12. Will's expenditures on food for three consecutive years, along with other values, are presented in the table below. Year 2009 2010 2011 Expenditures on Food $5,000 $5,800 $6,600 Consumer Price Index 160.0 168.0 x Refer to Table 24-12. Suppose Will's 2009 food expenditures in 2011 dollars amount to $5,750. Then the inflation rate for 2011 is about
9.52 percent.
Table 24-2 The table below pertains to Pieway, an economy in which the typical consumer's basket consists of 15 bushels of peaches and 10 bushels of pecans. 2012 $11 peach bushel $6 pecan bushel 2013 $9 peach bushel $10 pecan bushel If 2013 is the base year, then the CPI for 2012 was
95.7.
The consumer price index and the GDP deflator are two alternative measures of the overall price level. Which of the following statements about the two measures is correct?
The CPI reflects a fixed basket of goods and services; the GDP deflator reflects current production of goods and services.
Which of the following is not correct?
The consumer price index is used to measure the quantity of goods and services that the economy is producing.
The CPI and the GDP deflator
generally move together.
In the United States, nominal interest rates were
high in the 1970s and low in the 1990s.
When the overall level of prices in the economy is increasing, economists say that the economy is experiencing
inflation.
The economy's inflation rate is the
percentage change in the price level from the previous period.
The inflation rate you are likely to hear on the nightly news is calculated from
the CPI.
Economists use the term inflation to describe a situation in which
the economy's overall price level is rising.
Table 24-12. Will's expenditures on food for three consecutive years, along with other values, are presented in the table below. Year 2009 2010 2011 Expenditures on Food $5,000 $5,800 $6,600 Consumer Price Index 160.0 168.0 x Refer to Table 24-12. Suppose Will's 2009 food expenditures in 2011 dollars amount to $5,670. Then
the inflation rate in 2011 was 8 percent
Table 24-12. Will's expenditures on food for three consecutive years, along with other values, are presented in the table below. Year 2009 2010 2011 Expenditures on Food $5,000 $5,800 $6,600 Consumer Price Index 160.0 168.0 x Refer to Table 24-12. Suppose Will's 2009 food expenditures in 2011 dollars amounted to $5,670. Suppose also that the real interest rate in 2011 was 3 percent. Then, in 2011,
the inflation rate was 8 percent and the nominal interest rate was 11 percent.
Table 24-12. Will's expenditures on food for three consecutive years, along with other values, are presented in the table below. Year 2009 2010 2011 Expenditures on Food $5,000 $5,800 $6,600 Consumer Price Index 160.0 168.0 x Refer to Table 24-12. If the nominal interest rate was 8 percent in 2010, then
the real interest rate in 2010 was 3 percent.
Table 24-12. Will's expenditures on food for three consecutive years, along with other values, are presented in the table below. Year 2009 2010 2011 Expenditures on Food $5,000 $5,800 $6,600 Consumer Price Index 160.0 168.0 x Refer to Table 24-12. Will's 2009 food expenditures in 2010 dollars amount to
$5,250.
Table 24-12. Will's expenditures on food for three consecutive years, along with other values, are presented in the table below. Year 2009 2010 2011 Expenditures on Food $5,000 $5,800 $6,600 Consumer Price Index 160.0 168.0 x Refer to Table 24-12. To the nearest dollar, Will's 2010 food expenditures in 2009 dollars amount to
$5,524.
Table 24-12. Will's expenditures on food for three consecutive years, along with other values, are presented in the table below. Year 2009 2010 2011 Expenditures on Food $5,000 $5,800 $6,600 Consumer Price Index 160.0 168.0 x Refer to Table 24-12. Suppose the consumer price index is 15.5 percent higher in 2011 than in 2009. Then Will's food expenditures for 2010 in 2011 dollars amount to
$6,380.
Table 24-2 The table below pertains to Pieway, an economy in which the typical consumer's basket consists of 15 bushels of peaches and 10 bushels of pecans. 2012 $11 peach bushel $6 pecan bushel 2013 $9 peach bushel $10 pecan bushel If 2012 is the base year, then the CPI for 2013 was
104.4.
Table 24-12. Will's expenditures on food for three consecutive years, along with other values, are presented in the table below. Year 2009 2010 2011 Expenditures on Food $5,000 $5,800 $6,600 Consumer Price Index 160.0 168.0 x Refer to Table 24-12. Suppose Will's 2010 food expenditures in 2011 dollars amount to $6,235. Then x, the consumer price index for 2011, has a value of
180.6.
Table 24-12. Will's expenditures on food for three consecutive years, along with other values, are presented in the table below. Year 2009 2010 2011 Expenditures on Food $5,000 $5,800 $6,600 Consumer Price Index 160.0 168.0 x Refer to Table 24-12. Suppose Will's 2009 food expenditures in 2011 dollars amount to $5,750. Then x, the consumer price index for 2011, has a value of
184.0.
Table 24-2 The table below pertains to Pieway, an economy in which the typical consumer's basket consists of 15 bushels of peaches and 10 bushels of pecans. 2012 $11 peach bushel $6 pecan bushel 2013 $9 peach bushel $10 pecan bushel If 2013 is the base year, then the inflation rate in 2013 was
4.4 percent.
Table 24-2 The table below pertains to Pieway, an economy in which the typical consumer's basket consists of 15 bushels of peaches and 10 bushels of pecans. 2012 $11 peach bushel $6 pecan bushel 2013 $9 peach bushel $10 pecan bushel If 2012 is the base year, then the inflation rate in 2013 was
4.4 percent.
The price index was 150 in the first year, 142.5 in the second year, and 138.2 in the third year. The economy experienced
5.0 percent deflation between the first and second years, and 3.0 percent deflation between the second and third years.
The consumer price index is used to
turn dollar figures into meaningful measures of purchasing power.
