Question
Part B Question 3 (a) Give a definition of the CPI and explain carefully how it is computed (4 marks) (b)Suppose an economy has only
Part B Question 3
(a) Give a definition of the CPI and explain carefully how it is computed (4 marks)
(b)Suppose an economy has only three goods and the typical family purchases the amounts given in the following table. The base year is 2012.
Compute the cost of consumption basket in 2012 and 2017 using the base year quantities. (4 marks)
Product | Quantity (2012) | Price (2012) | Price (2017) |
Hair cuts | 6 | $50 | $80 |
Backpacks | 4 | $25 | $30 |
Tacos | 100 | $1.00 | $5.00 |
(c) What is the CPI for in 2017? (2 marks)
(d) What is the inflation rate between 2012 and 2017? (2 marks)
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Business Driven Technology
Authors: Paige Baltzan
8th Edition
1259924920, 978-1259924927
