Measuring the Economy 1

Problems

Problem 2.1: What does the CPI measure? [Solution]

Problem 2.2:

Figure P.1: Goods and Services Consumed in Country C

Using the figure above, compute the CPI for Country C in year 1 using year 1 as the base year.

[Solution]

Problem 2.3: Using figure 1, compute the CPI for Country C in year 2 using year 1 as the base year. [Solution]

Problem 2.4: What is the percent increase in the price level in Country C from year 1 to year 2? [Solution]

Problem 2.5: What are 3 problems with CPI? [Solution]

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Consumer Price Index (CPI)

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