Question

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4) Given (CPI):

Good	2017	2018
Q. Beer	50	45
Q. Snacks	100	150
P. Beer	$1.25	$2.00
P. Snacks	$1.10	$1.20

What is the nominal total expenditures for 2017 and 2018 respectively? 4) _______

A) $172.5, $270 B) 172.5, $220.0

C) $374.5, $756.3               D) none of the above.

5) Given (CPI):

Using the Laspeyres price index, what are total expenditures for 2017?    5) _______

A) $172.5             B) $220.0

C) none of the above.       D) $270.0

6) Given (CPI):

Using the Laspeyres price index, what are total expenditures for 2018?    6) _______

A) $172.5             B) none of the above.

C) $270.0              D) $220.0

7) Given (CPI):

Using the Paasche price index, what are total expenditures for 2018?       7) _______

A) none of the above.      B) $172.5

C) $270.0              D) $220.0

8) Given (CPI):

What is the inflation rate using the Paasche price index between 2017 and 2018?               8) _______

A) 27.5%              B) 22.0%

C) 24.8%               D) none of the above.

9) Given (CPI):

What is the inflation rate using the Fisher's mean between 2017 and 2018?           9) _______

A) 22.0%              B) 27.5%

C) 24.8%               D) none of the above.

Answer 1

(4) (A)

Nominal expenditure, 2017 ($) = 50 x 1.25 + 100 x 1.1 = 62.5 + 110 = 172.5

Nominal expenditure, 2018 ($) = 45 x 2 + 150 x 1.2 = 90 + 180 = 270

(5) (A)

Laspeyers' Index = (Current year price x Base year quantity)

Laspeyers' Index, 2017 ($) = 50 x 1.25 + 100 x 1.1 = 62.5 + 110 = 172.5

(6) (D)

Laspeyers' Index, 2018 ($) = 50 x 2 + 100 x 1.2 = 100 + 120 = 220

(7) (A)

Paasche Index = (Base year price x Current year quantity)

Paasche Index, 2018 ($) = 45 x 1.25 + 150 x 1.1 = 56.25 + 165 = 221.25

NOTE: As per Answering Policy, 1st 4 questions are answered.