Suppose that people consume only three goods, as shown in this table: a. What is the percentage
Question:
Suppose that people consume only three goods, as shown in this table:
a. What is the percentage change in the price of each of the three goods?
b. Using a method similar to the CPI, compute the percentage change in the overall price level.
c. If you were to learn that a bottle of Gatorade increased in size from 2017 to 2018, should that information affect your calculation of the inflation rate? If so, how?
d. If you were to learn that Gatorade introduced new flavors in 2018, should that information affect your calculation of the inflation rate? If so, how?
Transcribed Image Text:
Bottles of Golf Balls ..$4... Gatorade Tennis 2017 price.... 2017 quantity.. Balls .$2... .$1 ..100... .100.... 200 | 2018 price... .$2... $2 $6.... 2018 quantity.... 100... .100.... 200
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a The percentage change in the price of tennis balls is 2 22 100 0 The percentage change i...View the full answer
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