Answer:
CPI = NEW PRICE / OLD PRICE = 776 / 760 = 1.02
INFLATION = CPI / OLD PRICE x 100 = 1.02 / 760 x 100 = 0.13%
Explanation:
Government survey takers determine that typical family expenditures each month in the year designated as the base year are as follows:
• 25 pizzas, $10 each •
Apartment rent, $600 per month
• Gasoline and car maintenance, $100 per month
• Phone service (basic service plus 10 long-distance calls), $50 per month In the year following the base year,
the survey takers determine that pizzas have risen to $11 each, apartment rent is $610, gasoline and maintenance costs are $115, 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.
ITEM OLD PRICE NEW PRICE
pizzas, $10 $11
Apartment rent, $600 $610
Gasoline $100 $115
Phone service <u>$50</u> <u>$40</u>
TOTAL. <u>760</u> <u>776</u>
<u />
CPI = NEW PRICE / OLD PRICE = 776 / 760 = 1.02
INFLATION = CPI / OLD PRICE x 100 = 1.02 / 760 x 100 = 0.13%
