AB 204 Unit 5 assignment sylvie George - 1 AB 204...

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1 AB 204 Macroeconomics: Unit 5 assignment Sylvie George Kaplan University 08/0 6/ 2015
2 1) Assume there is a simple economy where people consume only 2 goods, food and clothing. Further assume that the market basket of goods used to compute the CPI consists of 100 units of food and 20 units of clothing. a. Compute the percentage changes in the price of food and the percentage change in the price of clothing between 2004 and 2005.
b. Calculate the percentage change in the CPI between 2004 and 2005.
c. Do you think the CPI price changes affect all consumers in the economy to the same extent? Explain.

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