Question

of 4 8. The table below shows the Consumer Price Index (CPI) for Zimbabwe and Russia. After reading through some magazines, you find that the base year in Zimbabwe is 1994 and in Russia it is 1995 Zimbabwe Russia CPI CPI 34 1994 2002 1994 1995 2002 6912 670 Hint: to fal in the Hank spaces in the table, what is the CPI in the base year?) Show your work in the space below: Compute the inflation rate (percent change in the price level) in Zimbabwe between 1994 and 2002 a. b. Compute the inflation rate (percent change in the price level) in Russia between 1995 and 2002 Compute the inflation rate (percent change in the price level) in Russia between 1994 and 1995 c. d. Compute the inflation rate (percent change in the price level) in Russia between 1994 and 2002:

Answer 1

8. Suppose that there are two countries- Country Z and Country R. the base year of the country Z is 1994 and base year of Country R is 1995. It means that CPI in these two base years is 100 The required table is as follow Country R Country Z Year СРI Year СРI 1994 34 1994 100 2002 6912 1995 100 2002 670 The following formula is used to measure the inflation rate. CPIІ, -СРІ, , CРI, inflation rate = x100 а. find the inflation rate between years 1994 and 2002.

6912-100 inflation rate between 1994 and 2002 = x100 100 6812% For the country Z, the inflation rate between 1994 and 2002 is 6812% b. find the inflation rate between years 1995 and 2002 670-100 inflation rate between 1995 and 2002 = x100 100 570% For country R, the inflation rate between 1995 and 2002 570% C. find the inflation rate between years 1994 and 1995. 100-34 -x100 34 inflation rate between 1994 and 1995 =

66 x100 34 194.11% For the country R, the inflation rate between 1994 and 1995 is |194.11%|. d. find the inflation rate between years 1994 and 2002. 670-34 x 100 inflation rate between 1994 and 2002 = 34 1870.59% For the country R, the inflation rate between 1994 and 2002 is 1870.59%