Referring to Figure 19.2, the effect of a decrease in Japanese ...

[james9437]

Referring to Figure 19.2, the effect of a decrease in Japanese prices is represented by a movement from point
 
  A) d to a. B) d to c. C) c to d. D) c to b.

Question 2

In 1995, the CPI was 152.5 and the price of an economics textbook was 70.00 and a music CD was 16.00. If the CPI was 172.3 in 2011, what were the prices of the economics textbook and the music CD in 2011 dollars?
 
  What will be an ideal response?

[meganmoser117]

Answer to Question 1

B

Answer to Question 2

To adjust the two prices, the ratio of the CPI in 2011 to the CPI in 1995 is needed. This ratio is (172.3)/(152.5 ) = 1.13. Then multiply the 1995 prices by this ratio to convert the prices to 2011 dollars. This yields a 2011 dollar price for the textbook of (70.00  1.13 ) = 79.10 and a 2011 dollar price for the CD of (16.00  1.13 ) = 18.08.

[james9437]

Correct answers!

[meganmoser117]

Great! Please up vote