Year Quantity Goods Quantity Services Price Goods Price Services 2010 2000 6200 2 1.5 2011 2200 6400
Question:
Year | Quantity Goods | Quantity Services | Price Goods | Price Services |
2010 | 2000 | 6200 | 2 | 1.5 |
2011 | 2200 | 6400 | 2.11 | 1.65 |
2012 | 2500 | 6750 | 2.15 | 1.65 |
2013 | 2505 | 7100 | 2.3 | 1.9 |
2014 | 2700 | 7300 | 2.35 | 2 |
2015 | 3050 | 8000 | 2.5 | 2 |
2016 | 3100 | 8450 | 2.65 | 2.1 |
2017 | 3500 | 8650 | 2.7 | 2.15 |
Assume that consumers’ typical consumption basket of goods and services is exactly represented by the (relative) quantities of goods and services produced in 2015.
a. Calculate the implied CPI in each year, based on 2015 consumption quantities.
b. Calculate the CPI inflation rate for each year and the annual average inflation rate. How do these compare to the annual and annual average inflation rate of the GDP deflator? What is the correlation between the two inflation rates? Why do the two inflation rates in this example differ, if they do? What are the sources of differences in the two inflation rates in reality
Fundamentals of Corporate Finance
ISBN: 978-0133400694
1st canadian edition
Authors: Jonathan Berk, Peter DeMarzo, Jarrad Harford, David A. Stangeland, Andras Marosi