Question

The below table shows a basket of hypothetical goods the typical college student purchased from 2016 to 2018. 2a. What is the amount spent each year on the "basket" of goods with the quantities shown in column 2? Item 2017 $0.75 $0.40 $0.90 $2.15 2b. Construct the price index for a "basket" of college student goods in each year using 2016 as Qty 2016 2018 $0.50 $0.40 $0.70 $1.90 $0.85 $0.40 Good 1 4 Good 2 6 $0.95 $2.25 Good 3 2 Good 4 the base year. 2c. Compute the inflation rate for a "basket" of colllege student goods between 2016 to 2018

Answer 1

The below tabele shows a basket of hypothetical goods the to student purchased from 2016 to 2018! of hypothetical goods the typical college Item 2016 0.50 13.00 0.40 Good! Good & Good3 Good 4 Total 2 13 이이키 Amt Shenti Amt skenti Amt spent 2018 in 2016 in 200 m 2018 0.75 0.85 13.40 0.40 10.40 2.40 2.40 2.40 0.90 0.95 11.40 1.80 1.15 2.25 5.70 16:45 675 111.50 113.65 14:45 0.70 1.90 1,90 2a) So, a typical college student spends $11.50 i 2016 on tie basket of goods given above. Similarly, the student spends $13.65 and $14.45 lin 2017 and 2018 respectively on Uie same basket of goods. by Consumer price Index in 2017 - Cast of the basket of goods in 2017 Cost of de basket of goods in 2016 (bare year) * 100 13.65 11.50X100 =118,69 14.45 11.50 Consumer prie index în 2018 - 170x100 = 125.65 c) The inflation rate for the basket between 2016 and 2018 'is 'inflation rate : (P)2018 – CH 2016 xleo CPI - 125.65 – 100_x100 ~ 25.656%. 100