Note that the CPI-based rate of inflation between 2021 and 2022 in the baseline scenario provided...

 

    

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Note that the CPI-based rate of inflation between 2021 and 2022 in the baseline scenario provided is 9.6%. Suppose, instead of remaining at 40, the quantity of gasoline in 2022 rose to 80. What would be the rate of inflation? Instructions: Round your answer to one decimal place. b) Select the sentence from the list below that best explains your answer to part a). multiple choice • The CPI-based rate of inflation goes up to reflect the higher quantity of gasoline in 2022. • The CPI-based rate of inflation falls because the lower gasoline price in 2022 is now applied to a higher quantity. • The CPI-based rate of inflation is unchanged because it calculates the change in the cost of a fixed-weight basket of goods and services based on the quantities from 2021. . The CPI-based rate of inflation is unchanged because current expenditure is unaffected by quantity changes in 2022. A Consumer Price Index (with Inflation) YEAR 2022 (BASE YEAR) Good Rent (2-BR apartments) Hamburgers Movie tickets Gasoline (gallons) Constant Expenditure Current Expenditure Quantity 1 60 10 40 Price (0-$900) 600.00 2.00 7.00 1.50 Expenditure $600.00 $120.00 $70.00 $60.00 $850.00 $850.00 Reset YEAR 2023 Good Rent (2-BR apartments) Hamburgers Movie tickets Gasoline (gallons) Constant Expenditure Current Expenditure Quantity 1 60 10 40 Price (0-$900) 650.00 2.50 8.00 1.30 Expenditure $650.00 $150.00 $80.00 $52.00 $932.00 $932.00 Reset CPI CPI 2022 $850.00 $850.00 = 100.0 Rate of Inflation = 9.6% CPI 2023 = $932.00 $850.00 = 109.6 Note that the CPI-based rate of inflation between 2021 and 2022 in the baseline scenario provided is 9.6%. Suppose, instead of remaining at 40, the quantity of gasoline in 2022 rose to 80. What would be the rate of inflation? Instructions: Round your answer to one decimal place. b) Select the sentence from the list below that best explains your answer to part a). multiple choice • The CPI-based rate of inflation goes up to reflect the higher quantity of gasoline in 2022. • The CPI-based rate of inflation falls because the lower gasoline price in 2022 is now applied to a higher quantity. • The CPI-based rate of inflation is unchanged because it calculates the change in the cost of a fixed-weight basket of goods and services based on the quantities from 2021. . The CPI-based rate of inflation is unchanged because current expenditure is unaffected by quantity changes in 2022. A Consumer Price Index (with Inflation) YEAR 2022 (BASE YEAR) Good Rent (2-BR apartments) Hamburgers Movie tickets Gasoline (gallons) Constant Expenditure Current Expenditure Quantity 1 60 10 40 Price (0-$900) 600.00 2.00 7.00 1.50 Expenditure $600.00 $120.00 $70.00 $60.00 $850.00 $850.00 Reset YEAR 2023 Good Rent (2-BR apartments) Hamburgers Movie tickets Gasoline (gallons) Constant Expenditure Current Expenditure Quantity 1 60 10 40 Price (0-$900) 650.00 2.50 8.00 1.30 Expenditure $650.00 $150.00 $80.00 $52.00 $932.00 $932.00 Reset CPI CPI 2022 $850.00 $850.00 = 100.0 Rate of Inflation = 9.6% CPI 2023 = $932.00 $850.00 = 109.6

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To calculate the rate of inflation we compare the Consumer Price Index CPI in the base year 2022 with the CPI in the current year 2023 The CPIbased ra... View the full answer