BU204-02_JoleneWard_Unit5_Assignment.docx - 1 RUNNING HEAD...

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1 RUNNING HEAD: UNEMPLOYMENT & COST OF LIVING Unemployment and the Cost of Living Jolene Ward BU204-02: Macroeconomics Unit 5 February 2, 2019
2 RUNNING HEAD: UNEMPLOYMENT & COST OF LIVING 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. Food Clothing 2004 price per unit $8 $20 2005 price per unit $12 $40 a) Compute the percentage change 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.

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