Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 7: Q.2 Critical Thinking Questions (page 157)

Russian government economists follow the U.S. example of publishing a measure of "core inflation" in which food and energy prices are stripped from the consumer price index before computing annual inflation rates. Why do you think that Russian "core inflation" is lower than the annual rate of change in the Russian CPI including food prices?

Short Answer

Expert verified

Russian "core inflation" is lower than the annual rate of change in the Russian CPI including food prices since the core inflation record is determined by thinking about the purchaser cost file which does exclude the super unpredictable financial variable

Step by step solution

01

introduction

The CPI incorporates the cost of a fixed container of merchandise consumed by the majority. The purpose of ascertaining the core inflation is to appraise the drawn-out patterns in the costs.

02

explanation

The explanation for computing the core inflation is to appraise the drawn-out patterns in the costs. The Russian "core inflation" is lower than the yearly pace of progress in the Russian CPI that incorporates food costs since the core inflation record is determined by thinking about the purchaser cost file which does exclude the super unpredictable financial variable, for example, the energy and food costs.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

During the course of a year, the labour force consists of the same 1,000 people. Employers have chosen not to hire 20 of these people in the face of government regulations making it too costly to employ them. Hence, they remain unemployed throughout the year. At the same time, every month during the year, 30 different people become unemployed, and 30 other different people who were unemployed find jobs.

a. What is the frictional unemployment rate?

b. What is the unemployment rate?

c. Suppose that a system of unemployment compensation is established. Each month, 30 new people (not including the 20 that employers have chosen not to employ) continue to become unemployed, but each monthly group of newly unemployed now takes two months to find a job. After this change, what is the frictional unemployment rate?

d. After the change discussed in part (c), what is the unemployment rate?

Explain how the U.S. government calculates the official unemployment rate

Describe how price indexes are calculated and define the key types of price indexes

If each household in a nation were to track a consumer price index that averaged the prices of items consumed solely by that household, why would you anticipate that the annual rate of change of every household's average prices likely would differ?

At present, the nominal interest rate is 7 per cent, and the expected inflation rate is 5 per cent. The current year is the base year for the price index used to calculate inflation.

a. What is the real interest rate?

b. What is the anticipated value of the price index next year?
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free