Amalia Dini Ghassani

S1 Ekstensi Manajemen

Answer True (T) or False (F) and explain why.

1. The CPI is not just one index, but includes a large number of groups, subgroups and
selected items, such as a food index, a medical care index and an entertainment index.
2. An index number is a percent that measures the change in price, quantity, value, or
some other item of interest from one time to another.
3. All indexes have the same base, namely 1998-99, written 1998-99 = 100.
4. If in the year 2000 the price index is 120 and the value of the price index in 2001 is
125, it implies that there was a 5% increase in the price level in 2001.
5. The weighted aggregate price index assigns a lower weight to the items that are sold
in higher quantities.
6. The Laspeyres' method uses the amounts consumed in the base period, p0, as weights
to determine a price index.
7. The CPI is used as a yardstick for revising wages, pensions and other income
payments to keep pace with changes in prices or inflation.
8. If we are constructing a weighted index of the price of food for 2007 using the
Laspeyres' method and 1982-84 = 100, we use the amounts consumed in 2007, q0, as
weights.
9. Price indices are used to remove the effect of inflation so that business and economic
time series can be evaluated in a more meaningful way.
10. The Laspeyres and Paasche indices tend to differ when the length of time between the
periods increases since the relative quantities of items adjust to the changes in
consumer demand over time.
Jawaban :
1. T, CPI menutup biaya yang dibayar konsumen
2. T, definisi sudah sesuai
3. F, base period untuk indeks mungkin 1998-1999, sementara untuk indeks lain mungkin
1990
4. F, harga pada tahun 2001 naik namun hanya 4,17%
5. F, beban yang lebih tinggi diberikan ke item yang dijual dengan kuantitas lebih tinggi
6. T, harga indeks
7. T, CPI dapat digunakan untuk mengukur income dari pegawai pada tahun berjalan
berdasarkan base year
8. T, laspeyres menggunakan beban yang diambil dari base period
9. F, Indeks Harga digunakan untuk menghitung perubahan biaya atas pembelian beberapa
kombinasi barang(market basket)
10. T, konsumen akan menyesuaikan pola konsumsinya seiring berjalannya waktu
Multiple Choice Questions
1. The following table shows the value of CPI for three years in a country.

What is the annual inflation rate for 2005?

A. 1.46%.
B. 3.36%.
C. 4.87%.
D. 1.8%.
2. Which of the following statements is true about the Laspeyres and Paasche indices?
A. As long as the evaluation period is the same, the two indices usually yield the same
value.
B. The difference in the values of the two indices, if any, can usually account for the
varying price levels across periods.
C. The Laspeyres price index uses the current period quantities as weights, as opposed to
the base period quantities used by the Paasche price index.
D. The greater the length of time between periods, the higher the chances of variation
between the values of the two indices.
3. Which of the following types of returns captures the changes in purchasing power?
A. Nominal returns.
B. Real returns.
C. Income yield.
D. Capital gains yield.
4. If the price index for a particular year is 75, it implies that:
A. prices have increased by 7.5% over the base year.
B. prices have increased by 0.75% over the base year.
C. prices have decreased by 0.25% compared to the base year.
D. prices have decreased by 25% compared to the base year.
5. Three firms X, Y, and Z operate in the same industry, although their products have
different features and are priced differently. The following table provides the prices and
the quantities sold (in units) during the period 2000-2002.
 Compute the Paasche Index for 2002 if the base period is 2000 and the current period is
2002.
A. 94.11.
B. 106.26.
C. 130.
D. 106.07.
6. Consider the following information about the price and the price index of a popular book
over three years.

What was the price index for this book in 2010?

A. 72.
B. 92.59.
C. 107.2.
D. 108.
7. Consider the following information about the price and the price index of a popular book
over three years.

What was the approximate price of the book in 2011?

A. $10.00.
B. $10.80.
C. $8.10.
D. $10.69.
8. Consider the following information about the price and the price index of a popular book
over three years.

If the price index in 2011 was 95 instead of 111.11, it would imply that:
A. the price of the book in 2011 was 16.11% lower than its price in 2009.
B. 2011 would be considered as the base year.
C. the price of the book in 2011 was 5% lower than its price in 2009.
D. the price of the book in 2011 would be $4.

9. The following table provides the values of the simple price index for watches in a
country.

If the base year is revised from 2006 to 2007, calculate the updated index for 2008.
A. 113.5.
B. 96.77.
C. 95.24.
D. 103.33.
10. If the price index for a particular year is 75, it implies that:
A. prices have increased by 7.5% over the base year.
B. prices have increased by 0.75% over the base year.
C. prices have decreased by 0.25% compared to the base year.
D. prices have decreased by 25% compared to the base year.
11. Which of the following statements is true of the Consumer Price Index (CPI)?
A. It uses the same basket of goods and services as the Producer Price Index.
B. The quantities of items in the current year are used for computing the weights for the
index.
C. It is an unweighted price index used to measure inflation.
D. It is based on the prices paid by urban consumers for a representative basket of goods
and services.
12. A Paasche index with updated weights:
A. is likely to produce a lower estimate than a Laspeyres index when prices are
increasing.
B. uses the current period quantities as weights as opposed to the base period quantities
used in the Paasche index which does not use updated weights.
C. is likely to produce a lower estimate than a Laspeyres index when prices are
decreasing.
D. accounts for inflation but fails to account for changing consumption patterns over
time.
13. Which of the following statements is true about the comparison between the Laspeyres
and Paasche indices?
A. The Laspeyres index is more expensive to compute than the Paasche index.
B. The data requirements are more stringent for the Laspeyres index than for the Paache
index.
C. Unlike the Laspeyres index, the Paasche index incorporates current expenditure
patterns of consumers.
 D. Unlike the Paasche index, the Laspeyres index requires that the weights be updated
each year and the index numbers be recomputed for all of the previous years.
14. When Dana Roberts started her job as a librarian two years ago, her annual salary was
$40,000. Although she is very good at her job and is now earning 10% more than what
she started with, she notices that new hires in the same field are being offered $43,000 as
an annual salary this year. Which of the following statements is most likely to be true?
A. Dana is earning less than $43,000 this year.
B. Real income for librarians in this country has increased, on an average, by $3,000
during the last two years.
C. If inflation in the current year is very high, then it is possible that Dana was better off
with $40,000 two years back than the new hires are with a salary of $43,000 today.
D. Adjusted for inflation in the current year, it is likely that Dana's income this year is
lower than the income of the new hires.
15. When a given time series is adjusted for changes in prices, it is called a(n):
A. deflated series.
B. unweighted series.
C. nominal series.
D. cyclical series.
16. Katie Jones started her career with an annual salary of $30,000 in 2006. Five years later,
in 2011, her salary had increased to $55,000 a year. If the values of the CPI (with a base
of 1982-1984) for 2006 and 2011 are 201.6 and 224.9, respectively, compute the increase
in Katie's real income.
A. 64.34%.
B. 83.33%.
C. 105.31%.
D. 164.34%.
17. Which of the following correctly identifies the expression for calculating the inflation
rate for period t, based on the CPI?
A. 𝑖 𝑡 = (𝐶𝑃𝐼𝑡−1 − 𝐶𝑃𝐼𝑡 )⁄𝐶𝑃𝐼𝑡 .
B. 𝑖 𝑡 = (𝐶𝑃𝐼𝑡−1/𝐶𝑃𝐼𝑡) × 100.
C. 𝑖𝑡 = (𝐶𝑃𝐼𝑡 − 𝐶𝑃𝐼𝑡−1)⁄𝐶𝑃𝐼𝑡−1.
D. 𝑖 𝑡 = (𝐶𝑃𝐼𝑡/𝐶𝑃𝐼𝑡−1) × 100.
18. Real income is computed by
A. Dividing money income by the CPI and multiplying by 100.
B. Dividing the CPI by money income and multiplying by 100.
C. Multiplying money income by the CPI.
D. Subtracting the CPI from money income.
 Essay Questions

1. There is a demand for a fast-response-economic index to review past economic activity in

Jabara city. You are employed as an part-timer staff in Development Office. Your
supervisor decides to use consumer purchasing habit to understand the economy and ask
you to calculate some possible indices. The data are provided as follows:
Feb-2013 Mar-2013
Item Price (Rp) Quantity Price(Rp) Quantity
Rice (kg) 6800 1300 7200 1250
Egg (kg) 14000 180 14000 180
Onion (kg) 30000 250 55000 220
Garlic (kg) 30000 125 35000 120
Sugar (kg) 12000 225 11000 260
Questions:
a. Compute a simple aggregate price index for March 2013. Use February- 2013 as the
base period.
b. Compute the consumer-price- index for March 2013 using Laspeyres method.
Interpret your result.
c. Compute the consumer-price- index for March 2013 using Paasche method. Interpret
your result.
d. As you have recognized the advantages and the weakness of both Laspeyres and
Paasche Method, what is your suggestion and provide the calculation to overcome
those problems.
e. Calculate the level of inflation in March 2013 (using your proposed index)
f. What is your real wage if your real wage if your salary now Rp2,500,000,- (use
February- 2013 as the base period ).
(7200+14000+55000+35000+ 11000)
1.a. × 100=131.68
(5700+14000+30000+30000+ 12000)
1.b.
( 7200× 1300 ) + ( 14000× 180 ) + ( 55000 ×250 ) + ( 35000 ×125 ) +(11000× 225)
×100=128.32
( 6800 ×1300 ) + ( 14000 ×180 )+ ( 30000+ 250 )+ ( 30000× 125 ) +(12000 ×225)
1.c.
( 7200× 1250 ) + ( 14000× 180 ) + ( 55000 ×220 ) + ( 35000 ×120 ) +(11000× 260)
×100=126.04
( 6800 ×1250 ) + ( 14000 ×180 )+ ( 30000+ 220 )+ ( 30000× 120 ) +(12000 ×260)
1.d. Keuntungan dari metode Laspeyres adalah menggunakan tahun dasar sebagai bobot,
membuat data lebih mudah tersedia dan membuat Laspeyres lebih umum. Keuntungan dari
metode Paasche adalah memperhitungkan bahwa konsumen dapat mensubstitusi barang
dan jasa. Sedangkan kelemahan metode Laspeyres adalah bias ke atas, yang menunjukkan
tingkat yang lebih tinggi ketika harga naik, kelemahan metode Paasche adalah bias ke
bawah dan persyaratan untuk memiliki kuantitas tahun berjalan sebagai data tertimbang,
mengakibatkan biaya yang lebih tinggi untuk dilakukan. analisis. karena data mungkin
tidak tersedia pada saat itu
(128.32−100)
1.e. × 100 %=28.32%
100
1.f.
( 2.500 .000
128.32 )−(
2.500.000
100 ) ×100=−22.06 %
( 2.500.000
100 )
2.500.000-(2.500.00x22.06%)=1.948.500

2. In Funland there are only three commodities consumed: popcorn, movie and diet drink. The
following table shows the price (in thousand Rupiahs, P) and the amount consumed for these
commodities, Q in 2008, 2018 and 2019

Questions.
a. Compute the Paasche Price Index in 2008, 2018 and 2019 using 2008 as the base year.
b. If you would like to calculate the purchasing power from that income in 2019 compared
to in 2008, which price index should you use? Explain why.
c. If Annisa’s income was Rp500,000 per month in 2018, and did not change in 2019, using
the Paasche Index above as Consumer Price Index, what was her real income in 2019?
d. Calculate the inflation rate in 2019 using price index in(1)

2.a. Index 2008 =

Index 2018 =
Index 2019 =
2.b. Karena jeda periode cukup jauh, saya lebih suka menggunakan indeks laspeyres karena
indeks laspeyres hanya menggunakan besaran tahun dasar, yang diberikan. Ini lebih
sederhana daripada perhitungan yang diperlukan untuk indeks Paasche, yang
menggunakan besaran tahun berjalan. Indeks Paasche mengharuskan bobot diperbarui
setiap tahun.
( ( 500.000 ×162.3 ) −( 500.000× 308.5 ))
2.c. × 100=89.8
(500.000× 308.5)
500.000 - (500.000 x 10.2%) = 449.000
(162.3−308.5)
2.d. × 100 %=−47.3 %
308.5
3. following table shows the price (in thousand Rupiahs, P) and the amount consumed for these
commodities, Q in 2008, 2018 and 2019.
2008 2018 2019
Commodit P Q P Q P Q
y
Popcorn 1 500 1 600 1. 590
0
 5
Movie 5 300 1 200 1 210
0 0.
5
0
Diet drink 0 300 0. 400 0. 420
. 8 7
7 0 5
0
Questions.
a. Compute the Paasche Price Index in 2008, 2018 and 2019 using 2008 as the base year.
b. If you would like to calculate the purchasing power from that income in 2019 compared to
in 2008, which price index should you use? Explain why.
c. If Annisa’s income was Rp500,000 per month in 2018, and did not change in 2019, using
the Paasche Index above as Consumer Price Index, what was her real income in 2019?
d. Calculate the inflation rate in 2019 using price index in (1)
4. In monitoring national inflation rate, the government observes price movement of several
basic foods especially at wholesale markets. Central Bureau of Statistic (CBS) has
surveyed and collected data of several basic foods routinely for several years, as follow:
Price and Quantity of Basic Foods at Pasar Kramat Jati (in Rp and 000 kg)
Year Rice Sugar Cane Egg
Price 6,000 11,300 17,800
2014 Quantity 116 24 6
Price 6,400 11,450 18,500
2015 Quantity 118 22 8
Price 6,850 12,000 19,000
2016 Quantity 210 21 10
Price 7,650 12,100 22,250
2017 Quantity 215 25 12

Based on the data:

a. CBS calculates Price Index in monitoring the movement of prices of those basic foods.
Explain what does it means by Price Index.
b. Calculate Price Index of each commodity with 2014 as base year. Give explanation of
your the results.
c. CBS also calculates weighted index using Laspeyres and Paasche methods. Explain
what is (are) the difference(s) between the two and which method is better to be used?
Explain why.
d. Calculate the Price Index using Laspeyres method year 2014 as the base year.
e. Calculate the inflation rate based on Consumer Price Index.

3.a. Indeks harga adalah nilai numerik yang mudah ditafsirkan yang mencerminkan persentase
perubahan harga dari nilai dasar. Indeks harga sederhana adalah rasio harga pada periode t,
p t, dan harga pada periode dasar, p 0, dinyatakan sebagai persentase.
3.b. Rice2015 = 6400/6000 x100 = 106.6
Rice2016 = 6850/6000 x100 = 114.1
Rice2017 = 7650/6000 x100 = 127.5
 Sugar Cane 2015 = 11450/11300 x100 = 101.3
Sugar Cane 2016 = 12000/11300 x100 = 106.1
Sugar Cane 2017 = 12100/11300 x100 = 107.07
Egg 2015 = 18500/17800 x100 = 103.9
Egg 2016 = 19000/17800 x100 = 106.7
Egg 2017 = 22250/17800 x100 = 125
Hasil menunjukkan bahwa setiap komoditas memunculkan kenaikan pada setelah tahun
2014.
3.c. Metode Laspeyres lebih umum digunakan daripada metode Paasche karena alasan
tertentu, yaitu metode Paasche memerlukan pembaruan kuantitas tahun berjalan sebagai
data bobot yang dapat meningkatkan biaya perusahaan, dibandingkan dengan
menggunakan Laspeyres yang tidak memerlukan penggunaan kuantitas data tahun
berjalan, sebagai gantinya, menggunakan kuantitas tahun dasar sebagai data tertimbang.
Sebagai tambahan, laspeyres juga tidak akan ketinggalan zaman meskipun tergantung pada
bobot tahun dasar karena tahun dasarnya diubah secara berkala
3.d. CPI 2015 = ¿ ¿
CPI 2016 = ¿ ¿
CPI 2017 = ¿ ¿
( 105.04−100 )
3.e. Index 2015 = ×100 %=5.04 %
100
( 111.41−105.04 )
Index 2016 = × 100 %=6.06 %
105.04
( 122.09−111.41 )
Index 2017 = ×100 %=9.5 %
111.41

5. a. The real return from investing $100 in a stock for a year is computed to be 2%. If the
nominal return from this investment is 3.5%, what is the expected inflation rate?
b. Suppose the price of a slice of pizza increased from $2 in 2009 to $2.25 in 2010, and
then to $3 in 2011.
i. Compute the percentage change in the price of a slice of pizza between 2009 and
2011.
ii. Compute the simple price index for 2011 if 2009 is the base year.
iii. Compute the simple price index for 2009 if 2010 is the base year.
4.a. 1 + i = 1+ R / 1 + r
1 + i = 1.035/ 1,02
i = 1,014705882 - 1
i = 0,01470588235
Expected Inflation Rate = 0,01470588235 or 1,47%
4.b.i. 2010 growth = (2.25-2)/2 x100% = 12.5% ;
2011 growth = (3-2.25)/2.25x100% = 33.3%
4.b.ii. 3/2 x100% = 150
4.b.iii. 2/2.25 x100% = 88.8
5a. Using 2008 as the base year, the simple price index for an algebra book in 2009 was
computed to be 105. If the price of the book was $50 in 2009, compute the price in
the base year.
5b. Suppose the simple price index for a good was 112 in 2008, using 2007 as the base
year. In 2009 however, the simple price index for the same good was 98.
i. What does this information imply?
ii. If the price of the good was $20 in 2008, what was the price in 2009?
5.a. harga base year:
2009 index / 2008 index = 105 = 5% growth
2009 price – 2008 price/ 2008 price = 5%
50 – 2008 price / 2008 price = 5%
(50 - “2008 price”) (20) = 2008 price
1000 – 20 ”2008 price” = 2008 price
1000 = 21 ”2008 price”
1000 / 21 = 2008 price = $47.61
5.b.ii. Pada tahun 2009, ada penurunan 2% turun dari 2007 dan 12,5% dari tahun 2008
5.b.i. Harga tahun 2009 = $20-(12.5%x20) = $17.5