2301 Problem set3-11-2(2) (1)

# 2301 Problem set3-11-2(2) (1) - PROBLEM SET 3 Macroeconomic...

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PROBLEM SET 3 Macroeconomic Measurement Name Rebekah Nagel Semester: Spring 2017 1. The people of Fort Worth buy only juice and cloth. The CPI market basket contains the quantities bought in 2009. The average household spent \$60.00 on juice and \$30.00 on cloth in 2009 when the price of juice was \$2.00 a bottle and the price of cloth was \$5.00 a yard. In the current year, 2010, juice is \$4.00 a bottle and cloth is \$6.00 a yard. Calculate the CPI and inflation rate in 2010. \$90 is the base price, \$156 is the current price. 156/90 17.33 is the CPI (156-90)/(90) X 100 = 73.33% (inflation) 2. A) Assume the market basket contains 10X, 20Y, and 45Z. The current year prices for goods X, Y, and Z are \$1, \$4, and \$6, respectively. The base-year prices are \$1, \$3, and \$5, respectively. What is the CPI in current year? 10(1) x 20(4) x 45(6) 10x80x270 __________________ x 100 10(1) x 20(3) x 45(5) CPI is 16 10x60x225 B) If the CPI is 150 and the nominal income is \$100,000, what does real income equal? (100,000/150) x 100 \$66,666.67 is real income 3. PRICE INDEX CALCULATIONS:

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Using the necessary formulas, complete the table below: (Please state formulas used) Year 1 Year 2 Average Monthly Total Total Change Item (Base Yr)

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