Economics Homework Help. Macro Economics Consumer Price Index Questions
Can you help me understand this Macro Economics question?
1. Suppose in an economy a typical consumer’s basket consists of 30 coffees and 12 pizza.
In 2019, the price of coffee was $3, and price of pizza was $10. In 2020, the price of coffee was $4, and price of pizza was $11.
Answer (a), (b), and (c) based on this information related to consumer price index or CPI.
a. Assuming 2019 as base year, calculate CPI in 2019 and CPI in 2020.
b. Calculate the inflation rate from 2019 to 2020.
c. Mention at least 2 differences between GDP deflator and CPI. Each one of these could be used to compute inflation rate
2. Suppose John earned a salary of $50,000 in 2000 and $70,000 in 2020.
The consumer price index was 170 in 2000 and 260 in 2020.
a.How much is
John’s 2000 salary expressed in 2020 dollars?
b.
What is the present value of a payment of $2,000 to be received 4 years
from today if the interest rate is 5% (that is, r = 0.05)?
c.
Suppose that in a small nation the adult population is 6 million, the
number of employed is 3.8 million, and the labor force participation
rate is 70%. What is the unemployment rate?
