Use the item weights in the figure to determine the percentage change in the CPI that would result from a(n) a. 20 percent increase in entertainment prices. b. 8 percent decrease in transportation costs. c. doubling of clothing prices.

Use the item weights in the figure to determine the percentage change in the CPI that would result from a(n) a. 20 percent increase in entertainment prices. b. 8 percent decrease in transportation costs. c. doubling of clothing prices.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Refer to the figure below.
Insurance and
pensions 11.9%
Item
a. Entertainment
b. Transportation
c. Clothing
Housing
32.8%
Source: U.S. Bureau of Labor Statistics, Consumer Expenditure Survey (2018 date).
Entertainment 5,3%
Item Weight
0.053
0.159
0.03
Transportation
15.9%
Health care 8.1%
Use the item weights in the figure to determine the percentage change in the CPI that would result from a(n)
a. 20 percent increase in entertainment prices.
b. 8 percent decrease in transportation costs.
c. doubling of clothing prices.
(Note: Review the table titled "Computing Changes in the CPI" in your text for assistance.)
Instructions: Enter your responses as a percentage rounded to two decimal places. If you are entering any negative numbers be sure
to include a negative sign (-) in front of those numbers.
Price
Change
20%
-8%
100%
Food
12.9%
Clothing 3.0%
Impact on CPI
(Inflation Effect)
Miscellaneous 10.1%

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