Price indexes can be used to compare prices across different periods. Suppose th

Question

Price indexes can be used to compare prices across different periods. Suppose that a year of tuition for college at public institutions aver aged a cost of $1,867 in 1989 and that the CPI index was 118 in 1989. If the CPI index was 214 in 2009, then the cost of tuition in 2009, as the result of inflation, would equal (Enter your response rounded to the nearest whole number) Suppose that the actual average cost of tuition in 2009 was $7,834. Relative to the expected cost computed above, the cost of tuition increased by (1) (1) O more than the amount of inflation O less than the same as

Explanation / Answer

If CpI index is 214 in 2009 then tution fees=1867/118*214=3385.9115

Actual avg cost of tution in 2014 was 7834

Then expected cost of tution increased by more than the amount of inflation

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