Question

Government survey takers determine that typical family expenditures each month in the year designated as the base year are as follows:

• 25 pizzas, $10 each

• Apartment rent, $600 per month

• Gasoline and car maintenance, $100 per month

•  Phone service (basic service plus 10 long-distance calls), $50 per month


In the year following the base year, the survey takers determine that pizzas have risen to $11 each, apartment rent is $610, gasoline and maintenance costs are $115, and phone service has dropped in price to $40.


Instructions: Enter your responses by rounding the CPI to three decimal places and the rate of inflation to one decimal place.


a. Find the CPI in the subsequent year and the rate of inflation between the base year and the subsequent year.

CPI:    

Rate of inflation:    %

Here are values of the CPI (multiplied by 100) for each year from 2000 to 2010. For each year beginning with 2001, calculate the rate of inflation from the previous year.

Instructions: Enter your responses rounded to two decimal places.
  

Year	CPI	Inflation Rate (%)
2000	127.7	—
2001	133.2
2002	137.3
2003	141.5
2004	145.2
2005	149.4
2006	153.9
2007	157.5
2008	160
2009	163.6
2010	169.2

Compared to 2000–2001, inflation rates remained   (Click to select)   the same   lower   higher  throughout the 2000s.

Answer 1

Year	CPI	INFLATION RATE (%)
2000	127.7	------
2001	133.2	[(133.2-127.7) / 127.7 ] * 100 = 4.31
2002	137.3	[(137.3 - 133.2) / 133.2] *100= 3.08
2003	141.5	[(141.5 - 137.3) / 137.3]*100 = 3.06
2004	145.2	[(145.2 - 141.5) / 141.5] *100= 2.61
2005	149.4	[(149.4 - 145.2) / 145.2]*100= 2,89
2006	153.9	[(153.9 - 149.4) / 149.4]*100= 3.01
2007	157.5	[(157.5 - 153.9)/153.9]*100= 2.34
2008	160	[(160 - 157.5)/157.5]*100= 1.59
2009	163.6	[(163.6 - 160) /160]*100= 2.25
2010	169.2	[(169.2 - 163.6) / 163.6]*100= 3.42

Inflation rate =[( current year CPI - Previous year CPI ) / Previous year CPI] * 100

Compared to 2000-2001, inflation rates remained lower throughout the 2000s.