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2.3 The CPI is a fixed-weight index. It compares the price of a fixed bundle of goods in one year with the price of the same
ve Suppose the number of employed people in an economy is 312,545,372. The unemployment rate in this economy is 7.4 percent,
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Answer #1

(2.3)

Good Quantity Consumed 2013 Prices 2014 Prices 2015 Prices
X 50 2 1.5 2
Y 125 3 3 2.5
Z 100 0.75 1.25 1.5

Price of bundle in 2013 = (50 * 2) + (125 * 3) + (100 * 0.75)

Price of bundle in 2013 = 100 + 375 + 75

Price of bundle in 2013 = 550

Price of bundle in 2014 = (50 * 1.5) + (125 * 3) + (100 * 1.25)

Price of bundle in 2014 = 75 + 375 + 125

Price of bundle in 2014 = 575

Price of bundle in 2015 = (50 * 2) + (125 * 2.5) + (100 * 1.5)

Price of bundle in 2015 = 100 + 312.5 + 150

Price of bundle in 2015 = 562.5

Index of 2013 = (Price of bundle in 2013 / Price of bundle in 2013) * 100

Index of 2013 = (550 / 550) * 100

Index of 2013 = 100

Index of 2014 = (Price of bundle in 2014 / Price of bundle in 2013) * 100

Index of 2014 = (575 / 550) * 100

Index of 2014 = 104.54.

Index of 2015 = (Price of bundle in 2015 / Price of bundle in 2013) * 100

Index of 2015 = (562.5 / 550) * 100

Index of 2015 = 102.27.

Percentage change in index between 2013 and 2014 = [(index of 2014 - index of 2013) / index of 2013] * 100

Percentage change in index between 2013 and 2014 = [(104.54 - 100) / 100] * 100

Percentage change in index between 2013 and 2014 = 4.54.

There was 4.54% change in index between 2013 and 2014.

Percentage change in index between 2014 and 2015 = [(Index of 2015 - index of 2014) / index of 2014] * 100

Percentage change in index between 2014 and 2015 = [(102.27 - 104.54) / 104.54] * 100

Percentage change in index between 2014 and 2015 = -2.17

There was -2.17% change in index between 2014 and 2015.

There was no inflation between 2014 and 2015 because the percentage change in index between 2014 and 2015 was in negative.

As per the HOMEWORKLIB POLICY, first question is answered.

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