Question

i am looking to see if my formulas for c and d are correct. if not please explain

thanks

Macroeconomics Cost of Living Worksheet use the table below to answer the questions that follow. The table shows prices and quantities consumed in Carnivoristan. Suppose that the base year is 2011. Show am work! Year 2011 2012 2013 Price of Beef $2.00 $2.50 X $2.75 Qty. of Beef 100 4 90 105 Price of Pork $1.00 ($0.90 X a Oty. of Pork 100 120 130 A a. What was the vale of the basket in the basb year? 2012 $2 per beef & 100) + (81 pork x 100) = 300M b. What were the values of the CPI in 2011, 2012, and 2013, respectively? (2011) use price of basket 2011 Price of basket 2016 300/300 = / X 700 700 700 2012) Price of basket 2012 Price of basket 2011 A3331300 -.ll x100 = 11 & What was the inflation rate for 2012? 2013 prie of basket 2013 price of basket 2011 CPI 012-CP! 2011 1 x 1100 56.75 X 105) + cel 2011 Y1X130)=288,75 + 130 d. What was the inflation rate for 2013? 2418.75% 30D CP1 2013-Ep1 2011x100 1:396 X10 CPI 2011 (139.587 . -- Line in 2012? Fynlain.

Answer 1

The formula for C part is correct and for D part is not . For calculating inflation rate we always have to subtract CPI of previous year from the CPI of current year and then divide the result by CPI of previous year .

(CPI) o Inflation onte - Consumer Price Index of current year. - CPI of previous year xloo CPI of the previous year CPI(2012] -EPI (2011) Hence, c. Inflation rate for 2012 - CPI (2011) Χιοο D. Inflation rate for 2013 = 0 - CPI (2013) - CPI (2012) x100 CPI(2012)