Say in a hypothetical economy, people consume only two goods – nasi lemak premium and shoes. The market basket of goods used to compute the CPI has 40 units of nasi lemak premium and 15 units of shoes. Nasi Lemak Premium Shoes 2010 price (in RM) 12 10 2011 price (in RM) 20 20 a)How much have prices changed for nasi lemak premium and shoes over the one-year period? b)Suppose the base year was 2005 and total expenditures for the base year was RM500. Calculate the inflation rate. c)Do these price changes affect all consumers the same way? Explain.

Say in a hypothetical economy, people consume only two goods – nasi lemak premium and shoes. The market basket of goods used to compute the CPI has 40 units of nasi lemak premium and 15 units of shoes. Nasi Lemak Premium Shoes 2010 price (in RM) 12 10 2011 price (in RM) 20 20 a)How much have prices changed for nasi lemak premium and shoes over the one-year period? b)Suppose the base year was 2005 and total expenditures for the base year was RM500. Calculate the inflation rate. c)Do these price changes affect all consumers the same way? Explain.

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter6: Macroeconomic Measurements, Part I: Prices And Unemployment

Section: Chapter Questions

Problem 9WNG

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