Macro Economics – Data Table Inflation

  

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Worksheet – Unit 4 MACRO
Data Table Inflation-1: Data for the Imaginary Land of Lukistan
Lukistan is a small hypothetical country run by the benevolent dictator economist for whom
the country is named. In the years 1990 through 1994 it recorded the following
macroeconomic performance. Using the data in this table, you should first calculate the
data for the empty cells in this table. Do not compare this data to any data you might find
for Lukistan in other worksheets. Since Lukistan is imaginary, history changes at the whim
of the teaching professor.
YEAR
GDP DEFLATOR
1990
92.0
1991
95.0
1992
100.0
1993
105.0
1994
110.5
1995
108.2
INFLATION RATE
Data Table Inflation-2: Selected Data for the United States
The following table provides data for two commonly used price indexes in the U.S. for
selected pairs of years. Using the data in this table, you should first calculate the data for
the empty (unshaded) cells in this table. This data is real data from FRED, but is rounded for
simpler calculations, year-end values used.
CONSUMER
YEAR
GDP
INFLATION
PRICE
INFLATION
DEFLATORPRICE
RATECALCULATED
INDEX (CPI)
RATECALCULATED
INDEX 2005=100.0
FROM GDP DEFLATOR
2005 = 100.0
FROMCPI
1930 10.2
16.1
1931 9.2
14.3
1950 15.6
25.4
1951 15.7
26.5
1970 25.1
20.4
1971 26.3
21.0
1980 50.9
44.5
1981 54.4
48.3
1990 74.3
68.9
1991 76.0
70.7
2000 90.1
89.7
2001 91.6
90.7
2010 112.4
112.8
2011 114.6
116.1
TO COMPLETE THE WORKSHEET, go to your Learning Management System (D2L at
LCC) and complete the “quiz” labeled Unit 4 Worksheet.
TIPS:
1. If you need a formula to calculate a particular field, check out the page on inflation
rate calculations in the Unit 4 Closer Look.
2. Calculate all the missing data in the tables first. Then try to answer questions.
3. The cells that are grayed-out cannot have data calculated because we do not know the
year previous – look closely at the years.
4. Formatting: round your answers and format them the same as in the table used. If
entering inflation rates, enter them using a rounded percentage number, including the
percent and any minus sign with no spaces in the answer. Ex: 9.9% or -9.9%
Questions:
1. What was the inflation rate in Lukistan in 1993?
2. What was the inflation rate in Lukistan in 1991?
3. In Lukistan, what was the inflation rate in the base year?
4. In what year, if any, did Lukistan experience deflation? (if it didn’t experience inflation, enter
0000)
5. What was the inflation rate in US, using the CPI, in 1971?
6. What was the inflation rate in US, using GDP Deflator, in 1971?
7. The Great Depression started in 1929 and lasted throughout the 1930’s. By how much did
prices decline in general in 1931 (using CPI)?
8. Let us suppose for the sake of argument, that your professor worked at a corporation in 19801981 (I know it seems like he can’t possibly be that old, just assume it was his first job after
kindergarten). He had an “excellent” annual employee performance review at the end of 1981
and was granted a salary increase of 8%. Which of the following statements best describes the
situation: (MULTIPLE CHOICE)
9. Which statement best describes the US experience from 1980 through 2010 (not including
2011 – assume a continuous smooth trend through these years):
10. What best explains why the GDP deflator and the CPI give different estimates of the inflation
rate in the same year? (MULTIPLE CHOICE)
Answer sheet below !!
Question 1 (1 point)
What was the inflation rate in Lukistan in 1993?
Question 1 options:
Save
Question 2 (1 point)
What was the inflation rate in Lukistan in 1991?
Question 2 options:
Save
Question 3 (1 point)
In Lukistan, what was the inflation rate in the base year?
Question 3 options:
Save
Question 4 (1 point)
In what year, if any, did Lukistan experience deflation? (if it didn’t experience inflation, enter 0000)
Question 4 options:
Save
Question 5 (1 point)
What was the inflation rate in US, using the CPI, in 1971?
Question 5 options:
Save
Question 6 (1 point)
What was the inflation rate in US, using GDP Deflator, in 1971?
Question 6 options:
Save
Question 7 (1 point)
The Great Depression started in 1929 and lasted throughout the 1930’s. By how much did prices decline in
general in 1931 (using CPI)?
Question 7 options:
Save
Question 8 (1 point)
Let us suppose for the sake of argument, that your professor worked at a corporation in 1980-1981 (I know
it seems like he can’t possibly be that old, just assume it was his first job after kindergarten). He had an
“excellent” annual employee performance review at the end of 1981 and was granted a salary increase of
8%. Which of the following statements best describes the situation:
Question 8 options:
1)
He should be very happy. His real income is up significantly. Time to
party.
2) He fell significantly behind because of inflation.
The “raise” basically was close to the inflation for that year. His real
3) income in terms of the goods and services he can purchase is
essentially unchanged. The raise just covered cost of living.
4) The data presented doesn’t offer any insights about this 8% raise.
Save
Question 9 (1 point)
Which statement best describes the US experience from 1980 through 2010 (not including 2011 – assume a
continuous smooth trend through these years):
Question 9 options:
1) rising inflation
2) hyperinflation
3) deflation
4) constant inflation
5) disinflation
Save
Question 10 (1 point)
What best explains why the GDP deflator and the CPI give different estimates of the inflation rate in the
same year?
Question 10 options:
1) statistical errors and sampling
two different data series calculated by different government
2) agencies and different economists; and economists never agree with
each other.
3)
the “market basket” of goods and prices being tracked to calculate
each is different.
4)
one measure the inflation rate and the other measures the deflation
rate.
The GDP deflator is the true series, but since most people only pay
5) attention to the CPI, the government reports different numbers in
CPI to achieve political objectives.

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