Real-Time Data Analysis Exercise The following table contains the values of two

Question

Real-Time Data Analysis Exercise The following table contains the values of two consumer price index categories from ERED for July, 2018 Consumer Price Indexes: Selected Categories Month/Yr Jul/2018 Housing 258.538 Medical Care 485.406 Real-time data provided by Federal Reserve Economic Data (FRED), Federal Reserve Bank of Saint Louis. Because the index for medical care exceeds the index for housing, it must be the case that a unit of medical care costs more than a unit of housing. This assertion is false Suppose nat pr ces for both housing and medical care increase by 20%. Complete the owing table o show he ncrease hat occurs in each ot nese indexes Enteryourresponses rounded toone decimal place) Consumer Price Index Increases: Selected Categories Housing Medical Care

Explanation / Answer

Ans:

Consumer price index measures the change in the prices of market basket of consumer goods and services.

1) false

If medical care index exceeds the index for housing, it means change in the price of unit of medical care is higher than the change in the price of unit of housing.

2)

calculation of increase that occurs in each of these indexes.

Housing = 258,538 * 20%

= 51707.6

Medical Care = 485,406 * 20%

= 97081.2

Consumer Price Index Increases:

Housing Medical Care 51707.6 97081.2

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