Question

The consumer price index (CPI) compares the price of a fixed basket of goods (CPI basket) in certain year with the price of the same basket of goods in the base year. The table below keeps track of the prices of a basket of 100 units of good X, 150 units of good Y, and 25 units of good Z in three different years. Year 2000 Basket of Goods Year 2001 Year 2002 Consumed in units Base Year Unit Price $ Unit Price $ Unit price $ X = 100 1.00 1.50 1.75 Y = 150 1.50 2.00 2.00 Z = 25 3.00 3.25 3.00 1. (2 points) Calculate the cost of total spending of the basket of goods in years 2000, 2001, and 2002. (Refer to 9.1 The Price of a Basket of Goods) 2. (2 points) Assuming year 2000 is the base year. Based on the amount of 1., calculate the CPI of the year 2000, 2001, and 2002, by using this formula: CPI = (Cost of goods in certain year/Cost of goods in base year) x 100 3. (2 points) Calculate the inflation rate between 2000 and 2001, and between 2001 and 2002. (Refer to 9.1 The Price of a Basket of Goods) Inflation rate = ((This year CPI - Previous year CPI)/Previous year CPI) x 100

          The consumer price index (CPI) compares the price of a fixed basket of goods (CPI basket) in
certain year with the price of the same basket of goods in the base year.
The table below keeps track of the prices of a basket of 100 units of good X, 150 units of good Y,
and 25 units of good Z in three different years.
Year 2000
Basket of Goods
Year 2001
Year 2002
Consumed in units
Base Year
Unit Price $
Unit Price $
Unit price $
X = 100
1.00
1.50
1.75
Y = 150
1.50
2.00
2.00
Z = 25
3.00
3.25
3.00
1. (2 points) Calculate the cost of total spending of the basket of goods in years 2000,
2001, and 2002. (Refer to 9.1 The Price of a Basket of Goods)
2. (2 points) Assuming year 2000 is the base year. Based on the amount of 1., calculate the
CPI of the year 2000, 2001, and 2002, by using this formula:
CPI = (Cost of goods in certain year/Cost of goods in base year) x 100
3. (2 points) Calculate the inflation rate between 2000 and 2001, and between 2001 and
2002. (Refer to 9.1 The Price of a Basket of Goods)
Inflation rate = ((This year CPI - Previous year CPI)/Previous year CPI) x 100

The consumer price index (CPI) compares the price of a fixed basket of goods (CPI basket) in
certain year with the price of the same basket of goods in the base year.
The table below keeps track of the prices of a basket of 100 units of good X, 150 units of good Y,
and 25 units of good Z in three different years.
Year 2000
Basket of Goods
Year 2001
Year 2002
Consumed in units
Base Year
Unit Price Unit Price
Unit price X = 100
1.00
1.50
1.75
Y = 150
1.50
2.00
2.00
Z = 25
3.00
3.25
3.00
1. (2 points) Calculate the cost of total spending of the basket of goods in years 2000,
2001, and 2002. (Refer to 9.1 The Price of a Basket of Goods)
2. (2 points) Assuming year 2000 is the base year. Based on the amount of 1., calculate the
CPI of the year 2000, 2001, and 2002, by using this formula:
CPI = (Cost of goods in certain year/Cost of goods in base year) x 100
3. (2 points) Calculate the inflation rate between 2000 and 2001, and between 2001 and
2002. (Refer to 9.1 The Price of a Basket of Goods)
Inflation rate = ((This year CPI - Previous year CPI)/Previous year CPI) x 100

Added by Kevin T.

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