Lets say that a bag of Lays chips cost 20 cents in 1975 Lets also that we also

# Lets say that a bag of lays chips cost 20 cents in

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10.Let’s say that a bag of Lays chips cost 20 cents in 1975. Let’s also that we also know the CPI for 1975 and the CPI for today. Which of the following would you use to compute the price of the candy bar in today’s prices? a) 20 cents x (1975 CPI/today’s CPI) b) 20 cents x (1975 CPI/today’s CPI-1975 CPI) c) 20 cents x (today’s CPI/1975 CPI) d) 20 cents x today’s CPI – 20 cents x 1975 CPI 11.Which one of the following statements best defines “indexation”? 12. Refer to the table below. The typical household in this country buys 4 loaves of bread, 2 pounds of cream cheese, and 8 books each week. The prices are given in the table below. Using 2016 as the base year, what would the CPI in 2017 be?

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Ana Vukadin ECON 1002 E YEAR Price of a loaf of bread Price of a pound of cream cheese Price of a book 2015 \$1 \$3 \$10 2016 \$2 \$6 \$20 2017 \$3 \$6 \$25 13.By failing to account for the possibility of consumer substitution, how is CPI biased? 14.Diminishing returns to physical capital implies that when the human capital per worker and the state of technology remain fixed, each successive increase in physical capital leads to a) negative productivity b) a decrease in productivity c) a larger increase in productivity d) a smaller increase in productivity 15.Which of the following best defines the catch-up effect?

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