1 A) Assume the market basket contains 10X, 20Y, and 45Z The current year prices for goods X, Y, and Z are $1, $4, and $6, respectively The base year prices are $1, $3, and $5, respectively What is the CPI in current year B) If the CPI is 150 and the nominal income is $100,000, what does real income equal (use formula Real income (Nominal Income CPI) x 100 2 PRICE INDEX CALCULATIONS Using the necessary formulas, complete the table below (Please state formulas used) Year 1 Year 2 Average Monthly Total Total Change Item (Base Yr) (current Yr) Consumption Expenses Expenses in (Prices in $) (Prices in $) for family X in Yr 1 in Yr 2 Prices ( ) P1 P2 Q (P1 Q) (P2 Q) (P 2 P 1 P 1 ) x 100 Fish 2 5 2 85 15 Rice (1bag) 3 99 4 12 Beans (1bag) 1 95 2 25 10 Sugar (1bag) 1 75 1 99 7 Toothpaste 3 5 3 95 2 Gas (gallon) 3 75 3 99 75 Books (1 a week) 25 26 4 Car Insurance (a month) 75 77 2(12) 3 Calculate the inflation rate for the following time periods (use the CPI data on WWW BLS GOV) or Simply click on this link https data bls gov pdq SurveyOutputServlet series id CUURA421SA0,CUUSA421SA0 and select 1959 to 1999 the hit go Then use the formula Change in CPI or inflation (CPI current year CPI base year CPI base year ) x 100 You will need five answers for a to e a 1959 1963 b 1964 1969 c 1970 1979 d 1980 1989 e 1990 1999 What is the difference between a b Why Compare inflation for 1970s and 1980s Any improvement in the 1990s What might be one reason for the improvement

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1.A) Assume the market basket contains 10X, 20Y, and 45Z. The current year prices for goods X, Y, and Z are $1, $4, and $6,

1.A) Assume the market basket contains 10X, 20Y, and 45Z. The current year prices for goods X, Y, and Z are $1, $4, and $6, respectively. The base-year prices are $1, $3, and $5, respectively. What is the CPI in current year?

B) If the CPI is 150 and the nominal income is $100,000, what does real income equal? (use formula: Real income = (Nominal Income/CPI) x 100

2.PRICE INDEX CALCULATIONS:

Using the necessary formulas, complete the table below: (Please state formulas used)

Year 1

Year 2

Average Monthly

Total

Change

Item

(Base Yr)

(current Yr)

Consumption

Expenses

(Prices in $)

for family X

in Yr 1

in Yr 2

Prices (%)

(P1 Q)

(P2 Q)

(P₂-P₁/P₁) x 100

Fish @

2.5

2.85

Rice (1bag)

3.99

Beans (1bag)

1.95

2.25

Sugar (1bag)

1.75

1.99

Toothpaste @

3.5

3.95

Gas (gallon)

3.75

3.99

Books (1 a week)

Car Insurance (a month)

2(12)

3.Calculate the inflation rate for the following time periods (use the CPI data on WWW.BLS.GOV) or Simply click on this link: https://data.bls.gov/pdq/SurveyOutputServlet?series_id=CUURA421SA0,CUUSA421SA0 and select 1959 to 1999 the hit go. Then use the formula Change in CPI or inflation = (CPI _{current year} - CPI _{base year}/CPI _{base year}) x 100. You will need five answers for a. to e.

a.1959 - 1963

b.1964 - 1969

c.1970 - 1979

d.1980 - 1989

e.1990 - 1999

What is the difference between a & b?Why?Compare inflation for 1970s and 1980s.Any improvement in the 1990s?What might be one reason for the improvement?