ECO 1102 Lecture Notes - Lecture 5: Gdp Deflator, Real Interest Rate, Nominal Interest Rate
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Table 24-7. The table below applies to an economy with only two goods â hamburgers and hot dogs. The fixed basket consists of 4 hamburgers and 8 hot dogs.
Year | Price of hamburgers | Price of hot dogs |
2009 | $5 | $3 |
2010 | 5.50 | 3.30 |
2011 | 5.61 | 3.63 |
Refer to Table 24-7. Between 2009 and 2011, the cost of living increased by
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The CPI is more commonly used as a gauge of inflation than the GDP deflator is because
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There are many different types of market baskets that economists measure. For example, the market basket for consumers called the 'Consumer Price Index' tracks the prices associated with the typical consumer's purchases of goods and services. The 'Producer Price Index' tracks the prices that firms receive when selling their goods and services.
Indicate the appropriate market basket to use in each of the following instances.
Consumer Price Index:
a) | Measuring differences in the cost of living between different cities. |
b) | Examining price changes that might affect businesses. |
c) | Measuring the cost of living for a typical consumer. |
Producer Price Index:
A) | Measuring differences in the cost of living between different cities. |
B) | Examining price changes that might affect businesses. |
C) | Measuring the cost of living for a typical consumer. |