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    CPI and Inflation

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    Suppose the CPI is 100 in 1992, its base year. In 1993 and 1994 it is equal to 112 and 120,respectively. During 1995 the economy experienced an inflation of 10 percent.
    a) What rate of inflation characterized this economy during 1994?
    b) If consumption in 1994 was $300 billion in 1994 dollars, what is this consumption expressed in 1992 dollars?
    c) What is the 1995 value of CPI?

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    Solution Preview

    Suppose the CPI is 100 in 1992, its base year. In 1993 and 1994 it is equal to 112 and 120,respectively. During 1995 the economy experienced an inflation of 10 ...

    Solution Summary

    The expert calculates the value of inflation and CPI.

    $2.19