Inflation/cpi calculations

Reference no: EM13875152

Inflation/CPI Calculations (version A)

Base Year (2006) 2013
Product	Quantity	Price	Price
Cokes	100	$0.50	$0.75
Hamburgers	200	2.00	2.50
CDs	10	20.00	21.00

1) Refer to table above. Assume the market basket for the consumer price index has three products: Cokes, hamburgers, and CDs.

The Consumer Price Index for 2013 equals ______.

Product	Quantity	Base Year Price (2001)	Price (2012)	Price (2013)
Burritos	10	$1.00	$1.50	$1.75
Flashlights	15	5.00	7.00	6.75
Golf balls	8	2.00	3.00	3.50

2) Refer to table above. Consider a simple economy that produces only three products: burritos, flashlights, and golf balls. Use the information in the table to calculate the inflation rate for 2013 (vs. 2012), as measured by the consumer price index.

Year	Nominal Average Hourly Earnings	CPI
2011	$10	100
2012	10	105
2013	12	110

3) Refer to table above. Real average hourly earnings were equal to ________ in 2012.

4) Looking at the table above, real average hourly earnings between 2012 and 2013 changed by ______%.

5) Matt's real wage in 2014 is $26.80. If the price level is 104, what is Matt's nominal wage?

Reference no: EM13875152

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