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Homework 3

# Homework 3 - increase or decrease in 2007 Year CPI 2005 200...

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Macroeconomics 1101:013 Kennedy Chesoli Homework 3 – Unemployment and CPI Due Date: 18 Oct 2010 Please carefully show how you arrive at your answers. 1. A Consumer Expenditure Survey in Sparta shows that people buy only juice and cloth. In 2008, the year of the Consumer Expenditure Survey, and also the reference base year, the average household spent \$40.00 on juice and \$25.00 on cloth. The price of juice in 2008 was \$4.00 a bottle and the price of cloth was \$5.00. In 2009, juice was \$4.00 a bottle and cloth was \$6.00 a yard. Using this information; answer the following; (i) Calculate the CPI market basket and the percentage of household budget spent on juice in the reference base year. (ii) Calculate the CPI in 2009 and the inflation rate in 2009 2. Table 1 below shows the CPI in Sparta. Calculate Sparta’s inflation rate in 2006 and 2007. Did the price level rise or fall in 2007? Did the inflation rate

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Unformatted text preview: increase or decrease in 2007? Year CPI 2005 200 2006 219 2007 237 3. What are the problems and limitations associated with the CPI? What are the consequences of them? 4. The Bureau of Labor Statistics reported that in June 2005, the labor force was 151.1 million, employment was 143.3 million, and the working-age population was 226.2 million. Calculate the unemployment rate and the labor force participation rate in June 2005. 5. In June 2005, the US labor force was 151.1 million, U.S. employment was 143.3 million and the U.S. working-age population was 226.2 million. In June of 2005 in Canada, the labor force was 17.1 million, employment was 15.7 million, and the working-age population was 25.1 million. Do you think that jobs are harder to find in Canada or in the United States? Why?...
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