Question
The writing assignment requires the application of your understanding of how CPI and inflation are calculated. Relevant knowledge is important because inflation affects all aspects
The writing assignment requires the application of your understanding of how CPI and inflation are calculated. Relevant knowledge is important because inflation affects all aspects of an economy, including policy-making and purchasing power.
| Product | Quantity | Base Year Price (2011) | Price (2021) | Price (2022) |
|---|---|---|---|---|
| Burritos | 10 | $1.00 | $1.50 | $1.75 |
| Flashlights | 15 | 5.00 | 7.00 | 6.75 |
| Golf Balls | 8 | 2.00 | 3.00 | 3.50 |
Refer to the table above.
Consider a simple economy that produces only three products: burritos, flashlights, and golf balls. Use the information in the table to calculate the total expenditure for 2021 and 2022; the CPI for 2021 and 2022, and the rate of inflation for 2022, as measured by the CPI. Please include all your work.
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Modern Principles of Economics
Authors: Tyler Cowen, Alex Tabarrok
3rd edition
1429278390, 978-1429278416, 1429278412, 978-1429278393
