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Economics
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19 Oct 2020

Using the information below on the cost of purchasing a basket of goods over four years, calculate the price indices using year four as the base year.

Year one                    

Year two

Year three

Year four

$900

$950

$1000

$1200

 

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Macroeconomics
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Understanding Inflation
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Vaishali Yadav
Vaishali YadavLv10
19 Oct 2020

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Related questions

If the cost of purchasing the basket of goods for four years is as follows:

Year 1= $400

Year 2= $600       

Year 3=$800

Year 4=$1200

Assuming year 2 as the base year the price indices for each year are

If the cost of purchasing a basket of goods is $900 for the year 2019 and $700 for the year 2018. Calculate the annual rate of inflation for the year 2019.

(Consumer Price Index) Calculate a new consumer price index forthe data in the following exhibit. Assume that current-year pricesof Twinkies, fuel oil, and cable TV are $0.95/package,$1.25/gallon, and $15.00/month, respectively. Calculate the current years cost of the market basket and the value of the current years price index. What is this year's percentage change in the price level compared to the base year?

Twinkies: Quantity in Market Basket - 365 packages

Prices in Base Year - $0.89/packages

Cost of Basket in Base Year (2) = (1) x(2) - $324.85

Prices in Current Year - $288.35

Cost of Basket in Current Year (5) =(1)x(4) - $288.35

Fuel Oil - Quantity in Market Basket - 500 gallons

Prices in Base Year - $1.00/gallon

Cost of Basket in Base Year (2) = (1) x (2) - $500

Prices in Current Year - $1.50

Cost of Basket in Current Year (5) = (1)x(4) - $750.00

Cable TV - Quantity in Market Basket - 12 month

Prices in Base Year - $30.00/month

Cost of Basket in Base Year (2) = (1) x (2) -$360.00

Prices in Current Year - $30.00

Cost of Basket in Current Year (5) = (1)x(4) - $360.00

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