Chapter 22: Q 12 (page 553)
Why do economists use index numbers to measure the price level rather than dollar value of goods?
It is easy as compared to dollar value of goods.
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Why does the “quality/new goods bias” arise if we calculate the inflation rate based on a fixed basket of
goods?
Why is the GDP deflator not an accurate measure of inflation as it impacts a household?
Construct the price index for a “fruit basket” in each year using as the base year.
Compute the inflation rate for fruit prices from to .
Why do you think the U.S. experience with inflation over the last 50 years has been so much milder than in many other countries?
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