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    hongphuc
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    The document provides consumption data for three products - haircuts, hamburgers, and DVDs - for the years 2016, 2017, and 2018. It then calculates the consumer price index (CPI) for each year, with 2016 as the base year. The CPI was 100 in 2016, 103.53 in 2017, and 105.29 in 2018. The inflation rate from 2017 to 2018 was calculated to be 1.7%.

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    The document provides consumption data for three products - haircuts, hamburgers, and DVDs - for the years 2016, 2017, and 2018. It then calculates the consumer price index (CPI) for each year, with 2016 as the base year. The CPI was 100 in 2016, 103.53 in 2017, and 105.29 in 2018. The inflation rate from 2017 to 2018 was calculated to be 1.7%.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    4 views2 pages

    Individual Assigment

    Uploaded by

    hongphuc
    The document provides consumption data for three products - haircuts, hamburgers, and DVDs - for the years 2016, 2017, and 2018. It then calculates the consumer price index (CPI) for each year, with 2016 as the base year. The CPI was 100 in 2016, 103.53 in 2017, and 105.29 in 2018. The inflation rate from 2017 to 2018 was calculated to be 1.7%.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 2

    Question: Consider a simple economy in which there are only three products.

    In
    the table below, data regarding typical household consumption are shown for three
    different years: 2016, 2017 and 2018.

    2016 2017 2018


    (BASE
    YEAR)

    PRODUCT QUANTITY PRICE PRICE PRICE

    Haircuts 2 $20.00 $22.00 $25.00

    Hamburgers 10 4.00 4.20 4.50

    DVDs 6 15.00 15.00 14.00

    Calculate the Consumer Price Index (CPI) in 2016, 2017 & 2018. Assume that
    2016 is the base year
    Calculate the inflation rate in 2018

    ANSWER: a.

    CPI 2016= (2 x $20.00 + 10 x $4.00 + 6 x $15.00) / (2 x $20.00 + 10 x $4.00 + 6 x


    $15.00) x 100

    = 1 x 100

    = 100

    CPI 2017 = (2 x $22.00 + 10 x $4.20 + 6 x $15.00) / (2 x $20.00 + 10 x $4.00 + 6 x


    $15.00) x 100
    = 176 / 170 * 100
    ≈ 103.53
    CPI_2018 = (2 x $25.00 + 10 x $4.50 + 6 x $14.00) / (2 x $20.00 + 10 x $4.00 + 6
    x $15.00) x 100
    = 179 / 170 x 100
    ≈ 105.29
    Inflation Rate in 2018= ((CPI 2018 – CPI 2017) / CPI 2017) x 100
    = ((105.29 - 103.53) / 103.53) x 100
    = 1.7%

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