John bought a house in 1993 for $ 70,000 and sold for $ 160,000 in 2016. Do you
ID: 1112061 • Letter: J
Question
John bought a house in 1993 for $ 70,000 and sold for $ 160,000 in 2016. Do you think he gained from the deal? (assume the CPI for 1993 is 145 and for 2016 is 240).
The table below pertains to Goldbell, an economy in which the typical consumer's basket consists of 2 jackets and 15 hamburgers.
From the table give calculate the CPI for 2009, 2010 and 2011. Also calculate the inflation rate for 2010 and 2011. (Make sure to show all steps).
In 1973, Malcolm bought a Pontiac Firebird for $2,500. If the price index was 48.3 in 1973 and the price index was 263 in 2016, then what is the price of the Firebird in 2016 dollars?
What are problems associated with Consumer Price Index? Explain them and provide example for each.
Year Price of Jackets Price of Hamburger 2009 $40 $3 2010 $45 $4 2011 $50 $3Explanation / Answer
John bought a house in 1993 for $ 70,000 and sold for $ 160,000 in 2016. Do you think he gained from the deal? (assume the CPI for 1993 is 145 and for 2016 is 240).
Current Value of the house = 70000*240/145 = 115862.1
John gained = 160,000-115,862.07 = 44137.93
Firebird Price = 2500*263/48.3 = 13612.84
Year Price of Jackets Price of Hamburger PQj PQh Total Expenditure CPI Inflation 2009 $40 $3 $80 $45 $125 100 2010 $45 $4 $90 $60 $150 120 20.0 2011 $50 $3 $100 $45 $145 116 -3.3
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