A Consumer Expenditure Survey in the city of Firestorm shows that people consume only firecrackers and bandages.

Question:

A Consumer Expenditure Survey in the city of Firestorm shows that people consume only firecrackers and bandages. In 2010, the year of the survey and also the reference base year, the average household spent $100 on firecrackers and $10 on bandages. The price of a firecracker in 2000 was $2, and the price of bandages was $1 a pack. In the current year, 2011, the price of a firecracker is $3 and the price of bandages is $1.25 a pack. Calculate:
a. The CPI basket.
b. The percentage of a household's budget spent on firecrackers in the base year.
c. The CPI in 2011.
d. The inflation rate in 2011.
Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Foundations of Macroeconomics

ISBN: 978-0132831000

6th edition

Authors: Robin Bade, Michael Parkin

Question Posted: