Problem 3: Again, consider the country of Opalia that produces two goods: footballs and basketballs. Below is a table showing prices and quantities of common consumer purchases for the past three years: Price of Footballs Price of Basketballs Qd Footballs Qd Basketballs Year Year 1 10 12 33 4 Year 2 12 4 15 Year 3 18 14 a) Compute the CPI index (using year 1 as the base). b) Compute the inflation rate. c) Compare the answer to part b) and the answer you found for problem 1, part d)? What is the origin of the difference?
Problem 3: Again, consider the country of Opalia that produces two goods: footballs and basketballs. Below is a table showing prices and quantities of common consumer purchases for the past three years: Price of Footballs Price of Basketballs Qd Footballs Qd Basketballs Year Year 1 10 12 33 4 Year 2 12 4 15 Year 3 18 14 a) Compute the CPI index (using year 1 as the base). b) Compute the inflation rate. c) Compare the answer to part b) and the answer you found for problem 1, part d)? What is the origin of the difference?
Chapter13: Inflation
Section: Chapter Questions
Problem 2SQP
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