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  1. #1
    So you guys on MySpace? Patient Bear's Avatar
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    Red face homework help (AP macroeconomics) (easy 17k reps)

    Two questions, but I'll rep you for answering either one. First come first served. If I happen to run out, I'll write your name down on a list and hit you in 24 hours - pinky promise (no hetero).

    1.) Explain the meaning of the following CPIs relative to a base year. Lastly, explain why the percent change in prices from year 3 to year 4 is NOT 25%.

    Year 1: 90
    Year 2: 100
    Year 3: 125
    Year 4: 150

    2.) Assume you put $100 into the bank. Use numeric examples to explain 3 different scenarios in which your REAL income falls, stays the same, and increases. (bad wording I know, retard for a teacher)

    Thanks again brahs.
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  2. #2
    So you guys on MySpace? Patient Bear's Avatar
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    please respond
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  3. #3
    In b4 everything moviebrah's Avatar
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    Originally Posted by Patient Bear View Post
    Two questions, but I'll rep you for answering either one. First come first served. If I happen to run out, I'll write your name down on a list and hit you in 24 hours - pinky promise (no hetero).

    1.) Explain the meaning of the following CPIs relative to a base year. Lastly, explain why the percent change in prices from year 3 to year 4 is NOT 25%.

    Year 1: 90
    Year 2: 100
    Year 3: 125
    Year 4: 150

    2.) Assume you put $100 into the bank. Use numeric examples to explain 3 different scenarios in which your REAL income falls, stays the same, and increases. (bad wording I know, retard for a teacher)

    Thanks again brahs.
    Okay I'm gonna take a stab at Number 1. Took Macroeconomics last semester and got an A so I think I have somewhat of an idea what I am doing (in b4 I am completely fuking wrong). So for year 1, the CPI indicates that total expenditures in that year were less than the base year, for year 2 expenditures were equal to the base year, for years 3 and 4 expenditures were greater than the base year. Finally, the percentage increase is not 25% because inflation is measured as the percentage increase of CPI from one year to the next, in other words ((150-125)/125) x 100 = 20% not 25%

    EDIT: For further information CPI is calculated as (expenditures in the current year/expenditures in the base year) x 100. So if you have a CPI of less than 100 it means your total expenditures were less than the base year (90), equal to base year (100), greater than base year (125,150)
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  4. #4
    Registered User LimitlessRX's Avatar
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    1)Year 1 cost of living decreases. Deflation is present

    Year 2 cost of living increases. Inflation is present

    Year 3 cost of living increases. Inflation present

    Year 4 cost of living increases but at a decreased rate. Inflation is slowing/turning into deflation

    2) Stays the same: $100 into bank with 5% interest. Inflation is 5%

    Falls: $100 into bank with 5% interest rate. Inflation is 10%

    Increases: $100 into bank with 5% interest rate. Inflation is under 5%


    EDIT: I would assume your teacher doesn't expect the poverty answer of a simple math calculation for question 1. Anyone can figure that out without knowing economics. Teacher is most likely asking why the rate of the CPI increase is slowing after year 3.
    Last edited by LimitlessRX; 02-26-2013 at 05:09 PM. Reason: dun goofed
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  5. #5
    So you guys on MySpace? Patient Bear's Avatar
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    Originally Posted by LimitlessRX View Post
    1)Year 1 is base year.
    wait wot, I thought base year CPI is set at 100
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  6. #6
    Registered User LimitlessRX's Avatar
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    Originally Posted by Patient Bear View Post
    wait wot, I thought base year CPI is set at 100
    Whoops sorry. Typed this chit up real quick and dun goofed. You are correct. Will fix
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  7. #7
    So you guys on MySpace? Patient Bear's Avatar
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    Originally Posted by LimitlessRX View Post
    Whoops sorry. Typed this chit up real quick and dun goofed. You are correct. Will fix
    Thanks brah. Gonna get you on rc, already wrote your name down.
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  8. #8
    Registered User LimitlessRX's Avatar
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    Originally Posted by Patient Bear View Post
    Thanks brah. Gonna get you on rc, already wrote your name down.
    Anytime. Hope it helps. Thanks for rapes
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