PS2 - economics rather than anthropology 3 Assume we live...

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Problem Set #2 1. Go to the BLS website ( http://www.bls.gov ) and find the value of the CPI for the year that  Dr. Evil was frozen (1967) and the year he hatches is plan to blackmail the world (1997).  Use these values to compute how much he would have to have demanded in 1997 to  get the equivalent of $1 million in 1967.  Was $100 billion too high or too low? 2. Which of the following people is unemployed?  If unemployed, what form of  unemployment is she experiencing?  If she is not unemployed, why not? a. A real estate broker who lost her job because people stopped buying houses  during the recession. b. A lawyer who resigns from her job to tend to a sick child c. The same lawyer as in (b) who has trouble finding a job when she returns to the  labor force after her child recovers. d. An anthropology professor who loses her job because everybody now majors in 
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Unformatted text preview: economics rather than anthropology. 3. Assume we live in a world with three goods: Ice cream, root beer, and tuna sandwiches. Suppose that in 2008 the typical consumer buys 4 half-gallons of ice cream, 10 bottles of root beer, and 20 tuna sandwiches each month. In 2008, a half-gallon of ice cream cost $2.50, a bottle of root beer cost $1.50, and a tuna sandwich cost $3.00. a. What does the typical market basket cost? b. Suppose that prices change in 2009 so that ice cream costs $4.00, root beer costs $2.25, and tuna sandwiches cost $2.50. Construct a CPI for the two years and compute the rate of inflation. c. Why might your answer in part (b) misstate the true change in the cost of living?...
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