A Consumer Expenditure Survey in Sparta shows that people buy onlyjuice and cloth.In 2018, the year of the Consumer Expenditure Survey and also thereference base year, the average household spent $20 on juice and $36on cloth.The table sets out the prices of juice and cloth in 2018 and 2019.Calculate the CPI market basket and the percentage of the averagehousehold budget spent on juice in the reference base year.The CPI market basket is...andPricesJuiceCloth2018$2 a bottle$6 a yard2019$5 a bottle$7 a yard

CPI or the Consumer Price Index helps measure the average change in price of a fixed basket of goods…

Answered: A Consumer Expenditure Survey in Sparta…

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter16: Measuring The Cost Of Living

Section: Chapter Questions

Problem 3CQQ

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Why is the GDP deflator not an accurate measure of inflation as it impacts a household?
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The difference between the CPI and the PCE is that the PCE index measures prices while the CPI measures spending the PCE is not a fixed basket of goods O the PCE includes food and energy prices while the CPI does not O the CPI includes food and energy prices while the PCE does not
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The typical consumer’s food basket in the base year 2015 is as follows: 30 chickens at $3 each 10 hams at $5 each 10 steaks at $8 eachA chicken feed shortage causes the price of chickens to rise to $5.00 each in the year 2016. Hams rise to $7.00 each, and the price of steaks is unchanged.a. Calculate the change in the “cost-of-eating” index between 2015 and 2016. Year Cost of the basket 2015 $ 2016 $ Instructions: Enter your responses rounded to one decimal place.The official cost-of-eating index has (Click to select) decreased increased by %.b. Suppose that consumers are completely indifferent between two chickens and one ham. For this example, how large is the substitution bias in the official “cost-of-eating” index?The increase in the cost-of-eating index is _______%. The overestimate of inflation in the cost of eating reflects substitution bias. (i am having trouble with part b primarily.)
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Suppose the information in the following table is for a simple economy that produces only the following four goods: shoes, hamburgers, shirts, and cotton. Further, assume that all af the ontton is used to produce shts 2012 Statistics 2020 Statisties 2021 Statistics Product Quantity 120 Quantity Price Quantity Price Price $75.00 3.50 Shoes 110 $55.00 120 $70.00 Hamburgers 85 3.00 120 3.00 135 Shirts 50 30.00 50 25.00 66 25 00 Cotton 12,000 0.09 12.000 0.07 13.000 0.08 af the base year is the year 2012, then real GDP for 2020 equals $ (round you answer to the nearest pennyl and the real GDP for 2021 equals S (round your answer to the nearest pennyl. b. The (annual) growth rate of real GDP in 2021 is %. (Enter your response as a percentage rounded to hwo decimal places.)
K- A Consumer Expenditure Survey in Sparta shows that people buy only juice and cloth In 2018, the year of the Consumer Expenditure Survey and also the reference base year, the average household spent $40 on juice and $25 on cloth The table sets out the prices of juice and cloth in 2018 and 2019. Calculate the CPI market basket and the percentage of the average household budget spent on juice in the reference base year The CPI market basket is CIND and The percentage of the household budget spent on juice in the reference base year is >>> Answer to 1 decimal place. percent CD Prices Juice Cloth 2018 $4 a bottle $5 a yard 2019 $7 a bottle $8 a yard
The residents of Vegopia spend all of their income on cauliflower,broccoli ,and carrots.In 2016,they spend a total of $200for 100 heads of cauliflower,$75 for 50 bunches of broccoli,and $50for 500carrots.In 2017,they spend a total of $225 for 75 heads of cauliflower,$120for 80bunches of broccoli,and $100for 500carrots.a.Calculate the price of one unit of each vegetable in each year.b.Using 2016,as the base year,calculate the CPI for each year.c.What is the inflation rate in 2017?
Im mimagmay.cempany Comumens buy ny Hot dogsand Hamburers. The fived basbet Comsinto oflo Hot dogs and 6 Homburgers A Rot dog cast $3 n 2006 amd $5.10 im 2004. A Homburger cat $5 m 2006 ond $6 im 2007 Colkulate CPI f T20076 elchodag he bole yom, 2006 amd 2007, and whot is the ilalien rote betweem 2006 amd 2007
Question 17 One problem with the CPI is the "substitution bias," which refers to consumers buying more of a good that has become cheaper and less of a good that has become more expensive. Assume that consumers consider Pepsi and Coke to be substitutes, so that when the price of Coke increases, consumers purchase less Coke and more Pepsi. When the CPI is calculated following the increase in the price of Coke, the substitution bias causes the CPI to O understate inflation since both the increase in the price of Coke and the increase in the amount of Pepsi purchased enter the CPI calculation O understate inflation since only the decrease in the price of Pepsi enters the CPI calculation O overstate inflation since both the increase in the price of Coke and the decrease in amount of Coke purchased enter the CPI calculation overstate inflation since only the increase in the price of Coke enters the CPI calculation

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