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Knapp4 - WEEK 4 CH7 Q7 The consumer price index(CPI is a...

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WEEK 4 CH7, Q7 – The consumer price index (CPI) is a fixed-weight index. It compares the price of a fixed bundle of goods in one year with the price of a fixed bundle of goods in one year with the price of the same bundle of goods in some base year. Calculate the price of a bundle containing 100 units of good X, 150 units of good Y, and 25 units of good Z in 2006, 2007, and 2008. Convert the results into an index by dividing each bundle price figure by the bundle price in 2006. Calculate the percentage change in your index between 2006 and 2007 and again between 2007 and 2008. Was there inflation between 2007 and 2008? QUANTITY PRICES PRICES PRICES GOOD CONSUMED 2006 2007 2008__ X 100 \$1.00 \$1.50 \$1.75 Y 150 \$1.50 \$2.00 \$2.00 Z 25 \$3.00 \$3.25 \$3.00 Cost of Market Basket in 2006 \$400 CPI in 2006 100 Cost of Market Basket in 2007 \$531.25 CPI in 2007 132.81 Cost of Market Basket in 2008 \$550 CPI in 2008 137.50 Rate of Inflation between 2006 and 2007 32.81% Rate of Inflation between 2007 and 2008 3.53% CH7, Q8 – Consider the following statements: a. More people are employed in Tappania now than at any time in the past 50 years. b. The unemployment rate in Tappania is higher now than it has been in 50 years. Can both of those statements be true at the same time?

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Knapp4 - WEEK 4 CH7 Q7 The consumer price index(CPI is a...

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