Question 2[15 marks] The tables below give the purchases of a typical consumer i
ID: 2439634 • Letter: Q
Question
Question 2[15 marks]
The tables below give the purchases of a typical consumer in a country comprised of one large city. These consumers purchase only restaurant meals and parking. The year 2012 is the reference base period.
Item
Quantity (2012)
Price (2012)
Meals
100
$10.00
Parking
50
$100.00
Item
Quantity (2013)
Price (2013)
Meals
100
$12.00
Parking
50
$97.50
a) Find the total cost of the CPI basket for 2012 and 2013. [5 marks]
b) What is the CPI in 2012 and in 2013? [5 marks]
c) What is the inflation rate between 2012 and 2013?
Explanation / Answer
a)
Find the total cost of the CPI basket for 2012
=100*10+50*100
=6000
Find the total cost of the CPI basket for 2013
=100*12+50*97.50
=6075
b)
CPI in 2012
=total cost of the CPI basket for 2012/total cost of the CPI basket for 2012*100
=6000/6000*100
=100
CPI in 2013
=total cost of the CPI basket for 2013/total cost of the CPI basket for 2012*100
=6075/6000*100
=101.25
c)
the inflation rate between 2012 and 2013
=101.25/100-1
=1.25%
the above is answer..
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