The table shows some coat prices for four years. The reference base period is 19

Question

The table shows some coat prices for four years. The reference base period is 1982-1984 a) Calculate the real price of coats in each year in 1982-1984 dollars and enter your numbers in the table (to the nearest cent) Year Price of Coats Real Price in 1982-1984 dollars (Report in dollars and cents--i.e. to 2 decimal places) 1981 1991 2001 $25 $45 $68 90.9 136.2 176.2 2006 $75 201.6 b) In which year was the real price of coats the lowest? OA. 1981 O B. 1991 O C. 2001 D. 2006 c) In which year was the real price of coats the highest? OA. 1981 . 1991 O C. 2001 D. 2006

Explanation / Answer

Answer : a)

Price of coats or Nominal price

b) The answer is option A.

Because in above table the coats' real price for year 1981 is $27.50. In the above table $27.50 is the "lowest real price of coats". Therefore, option A is correct.

c) The answer is option C.

Because in above table the coats' real price for year 2001 is $38.59. In the above table $38.59 is the "highest real price of coats". Therefore, option C is correct.

Year

Price of coats or Nominal price

CPI Real price in 1982 - 1984 dollars = (Nominal price / CPI) * 100 1981 $25 90.9 (25 / 90.9)*100 = $27.50 1991 $45 136.2 (45 / 136.2)*100 = $33.04 2001 $68 176.2 (68 / 176.2)*100 = $38.59 2006 $75 201.6 (75 / 201.6)*100 = $37.20

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