Question

From the following table. Take 2010 as the base year. The Data Office fixes the consumer price index (CPI) basket as 5 liters of Juice and 2 kg of Chicken.

Year	Price of Juice (in liters)	Quantity of Juice (in liters)	Price of Chicken (in kg)	Quantity of Chicken(in kg)
2010	$2	10	$5	5
2011	$2	11	$5	6
2012	$3	12	$8	6
2013	$4	10	$10	5

a. Calculate the cost of the CPI basket of goods in years 2010, 2011, 2012 and 2013.

b. Calculate the CPI in years 2010, 2011, 2012 and 2013.

c. Calculate the inflation rate in years 2011, 2012 and 2013.

d. The nominal interest rate in years 2011, 2012 and 2013 are 15%, 60% and 40% respectively. Calculate the real interest rate in these years.

Derivative of x⁶

Answer 1

A.

Cost of basket =price *quantity

2010=(2*10)+(5*5)

=20+25

=45

2011=(2*11)+(5*6)

=22+30

=52

2012=(3*12)+(8*6)

=36+48

=84

2013=(4*10)+(10*5)

=40+50

=90

B.

CPI =(cost of basket in current year /cost of basket in base year) *100

2010=(45/45)*100

=100

2011=(52/45)*100

=115.56

2012=(84/45)*100

=186.67

2013=(90/45)*100

=200

Inflation =[(cpi in year 2-CPI in year 1) /cpi in year 1] ×100

2011=[(115.56-100)/100]×100

=[(15.56/100)*100

=15.56%

2012=[(186.67-115.56)/115.56]×100

=[71.11/115.56]×100

=61.54%

2013=[(200-186.67)/186.67]×100

=[13.33/186.67]×100

=7.14%

D.

Real interest rate =nominal interest rate - inflation rate

2011=15-15.56

=-0.56%

2012=60-61.54

=-1.54%

2013=40-7.14

=32.86

Derivative of x6?

Answer :

D(x) =6x^5