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Principles of Economics- Mankiw (5th) 510

Principles of Economics- Mankiw (5th) 510 - 526 PA R T E I...

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526 PART EIGHT THE DATA OF MACROECONOMICS 4. Beginning in 1994, environmental regulations have required that gasoline contain a new additive to reduce air pollution. This requirement raised the cost of gasoline. The Bureau of Labor Statistics (BLS) decided that this increase in cost represented an improvement in quality. a. Given this decision, did the increased cost of gasoline raise the CPI? b. What is the argument in favor of the BLS’s decision? What is the argument for a different decision? 5. Which of the problems in the construction of the CPI might be illustrated by each of the following situations? Explain. a. the invention of the Sony Walkman b. the introduction of air bags in cars c. increased personal computer purchases in response to a decline in their price d. more scoops of raisins in each package of Raisin Bran e. greater use of fuel-efficient cars after gasoline prices increase 6. The New York Times cost $0.15 in 1970 and $0.75 in 1999.
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