Chapter 9: Q. 35 (page 244)
Within or percentage points, what has the U.S. inflation rate been during the last years? Draw a graph to show the data.
The inflation rate is lower mostly during times of recession or depression. During the last years the U.S. inflation rate was withinor, as it was facing the Great Recession.
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Describe a situation, either a government policy situation, an economic problem, or a private sector situation, where using the CPI to convert from nominal to real would be more appropriate than using the GDP deflator.
If, over time, wages and salaries on the average rise at least as fast as inflation, why do people worry about how inflation affects incomes?
Imagine that the government statisticians who calculate the inflation rate have been updating the basic basket of goods once every 10 years, but now they decide to update it every five years. How will this change affect the amount of substitution bias and quality/new goods bias?
How to Measure Changes in the Cost of Living introduced a number of different price indices. Which price index would be best to use to adjust your paycheck for inflation?
Construct the price index for a “fruit basket” in each year using 2003 as the base year.
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