ECON 1BB3 Study Guide - Model Rocket, Nominal Interest Rate, Gdp Deflator

• School: McMaster University
• Department: Economics
• Course: ECON 1BB3
• Professor: Bridget O' Shaughnessy

Document Summary

Fix the basket, find the prices, compute the basket"s cost, choose a base year and compute the index: fix the basket, find the prices, compute the inflation rate, choose a base year and compute the index. ___: the market basket used to calculate the cpi in aquilonia is 4 loaves of bread, 6 gallons of milk, 2 shirts and 2 pants. In 2005, bread cost . 00 per loaf, milk cost . 50 per gallon, shirts cost . 00 each and pants cost . 00 per pair. In 2006, bread cost . 50 per loaf, milk cost . 00 per gallon, shirts cost . 00 each and pants cost . 00 per pair. Using 2005 as the base year, what was aquilonia inflation rate in. It is impossible to determine without knowing the base year. In the country of shem, the cpi is calculated using a market basket consisting of 5 apples, 4 loaves of bread, 3 robes and 2 gallons of gasoline.