Question

(9) A typical resident of the country of HelloVille consumes a simple basket of goods consisting of tuna (can), champagne (glass), and movies. The base year's basket contains 500 tuna cans, 200 glasses of champagne, and 40 movies. The prices of these goods over 8 years are given in the table. You may use Excel for the calculations in this question; if you do so, please write out the answers on paper and upload the Excel spreadsheet alongside the scanned homework. Year 2010 2011 2012 2013 2014 2015 2016 2017 Tuna $1.50 $2.00 $2.00 $3.00 $2.50 $2.50 $2.75 $3.25 Champagne $7.00 $8.00 $7.50 $7.50 $8.50 $9.00 $11.00 $12.00 Broadway Shows $12.00 $12.00 $12.50 $11.50 $12.00 $13.00 $13.50 $15.00 G G Gܢ Using 2014 as the base year, what is the Consumer Price Index for 2016? Using 2014 as the base year, what is the Consumer Price Index for 2011? Using 2014 as the base year, what is the inflation rate in 2017? Using 2014 as the base year, which of the following answers is not true? Explain. i) The Consumer Price Index in 2016 is higher than in 2015. ii) The Consumer Price Index in 2014 is higher than in 2013. iii) The Consumer Price Index in 2011 is higher than in 2012. iv) The Consumer Price Index in 2012 is lower than in 2011.

Answer 1

Date : As, CPI = CPI = Cost of a Basket iha Year x Cost of a Banket in a Bane year 100 Tast of Basket (2016) = (500x2.75) + (200 x 11) + (40X 13.50) = 13.75t oo + $40 - = 4115 Tost of Busket (2014) = (500 x 2.50) + (200x8.5) + (40 X V) R50 + 1700 + 480 3430 CPI (2016) = 4115 x 100 251X ON =-119.92+ sy oor - be Cost of Basket (2011)= (500x2) + (200 x 8) + (40XR) sol 1000 + 1600+ 480 - 3080 CPI (2011) = 3080 x 100 3430 ( o) = 2.89079 a02

Cost (4DXIS of Booket (2017) = (500x3:) + (0oXR+lu 1625 + 2yout 60o 4625 Lt => = CPI (2017) = ) 4625 X 100 3430 134.83 = Inflation (2017) = ( 134.83 - 119.97 X 100 119.97 (d) Cost of Banket (2012) = NS - (Soox?) + (200X75) + » 1000 + 1500 tsoo x - 30000 29 (los) to you (40 XR.5) I CPI(2012) = 3000 xloo 3430 87-46 ! I cost of Basket (2013) = - (soox]) + oo x 7.5) + 2) 1500t 1500+ 460 - 3460 (40 x 11.5) CPI 2013) = 5460 xloo = 100-87 3430

Page No. Date : CPI( 2014 ) = loo (ost of Banket (15) =) is soo xeis) + (Yoox g) = 1250 + 1800 t sro = 3570 + (40x13) (RT 3570 Xloo 3430 104.08 So the right wonloo and option is (;;), becaune CPI(2017) CPI (2013) was 100.87,