Good Q. Beer Q. Snacks P. Beer P. Snacks 2017 50 100 $1.25 $1.10 2018 150 $2.00
ID: 1137770 • Letter: G
Question
Good Q. Beer Q. Snacks P. Beer P. Snacks 2017 50 100 $1.25 $1.10 2018 150 $2.00 $1.20 4) What is the nominal total expenditures for 2017 and 2018 respectively?4) A) S172.5, $270 B) 172.5, S220.0 C) S374.5, S756.3 D) none of the above. 5) Using the Laspeyres price index, what are total expenditures for 2018? 5) A) S172.5 C) none of the above. D S270.0 B) S220.0 6) Using the Paasche price index, what are total expenditures for 2018? A) $172.5 C) S270.0 6) B) none of the above D) S220.0 7) Using the Paasche price index, what are total expenditures for 2018? A) none of the above. B) $172.5 C) $270.0 7) D) S220.0 8) What is the inflation rate using the Paasche price index between 2017 and 2018? A) 27.5% C) 24.8% 8) B) 22.0% D) none of the above. 9) What is the inflation rate using the Fisher's mean between 2017 and 2018? A) 22.0% C) 24.8% 9) B) 27.5% D) none of the above.Explanation / Answer
4) The nominal total expenditure is calculated by multiplying price and quantity of each year and adding it together as shown below:
Nominal Total Expenditure for Year 2017:
Price of Beer * Quantity of Beer+ Price of Snacks * Quantity of Snacks
= 50*1.25+100*1.10
=172.5
Nominal Total Expenditure for Year 2018:
Price of Beer*Quantity of Beer+Price of Snacks*Quantity of Snacks.
=45*2+150*1.20
=270
Ans: a) $172.5, $270
5. Using Laspeyer's index, total expenditure is given by:
Summission PnQo
This means Sum of New Price*Old Quantity
Summission PnQo= 2*50+100*1.20
=220
Ans: b) $220.
6) Using Pasche's Price index, total expenditure is given by:
Summission PnQn
This means sum of New price* Old quantity
Summissin PnQn:
=45*2+150*1.20
=270
Ans: c) $270.
7) Same question as 6.
8) Inflation rate using Pasches price index:
Sum of PnQn/ Sum of PoQn*100
=270/(1.25*45+1.10*150)*100
=270/221.5*100
=121.89=122
Inflation rate= 122-100/100= 22%
Ans: b) 22%
9) Inflation rate using the Fisher's mean:
Squareroot of summission of PnQo/PoQo* Summission of PnQn/PoQn *100
= 220/172.5 + 270/221.5 *100
=1.28+1.22*100
=2.5*100
=2.5 *100
=24.8%
Ans: 24.8%
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