Government survey takers determine that typical family expenditures each month i
ID: 1229728 • Letter: G
Question
Government survey takers determine that typical family expenditures each month in the year designated as the base year are as follows:25 pizzas at $10 each
Rent of apartment, $600 per month
Gasoline and car maintenance, $100
Phone service (basic service plus 10 long-distance calls), $50
In the year following the base year, the survey takers determine that pizzas have risen to $11 each, apartment rent is $700, gasoline and maintenance have risen to $120, and phone service has dropped in price to $40.
a) Find the CPI in the subsequent year and the rate of inflation between the base year and the subsequent year.
Explanation / Answer
cpi is 1.074 rate of inflation is 7.4% the family is worst off calculations: cpi= 1020/950=1.074 inflation rate= (1.074-1)/1=0.074=7.4%
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