Chapter 22: Q. 11 (page 553)
How do economists use a basket of goods and services to measure the price level?
By using various methods economists do this task.
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Do you think perfect indexing is possible? Why or why not?
The index number representing the price level changes from 110 to 115 in one year, and then from 115 to 120 the next year. Since the index number increases by five each year, is five the inflation rate each year? Is the inflation rate the same each year? Explain your answer.
Describe a situation, either a government policy situation, an economic problem, or a private sector situation, where using the GDP deflator to convert from nominal to real would be more appropriate than using the CPI.
What is the difference between the price level and the rate of inflation?
Table 9.4 shows the fruit prices that the typical college student purchased from 2001 to 2004. What is the amount spent each year on the “basket” of fruit with the quantities shown in column ?
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