The following are the two CPI series (one for 1985-1989 with base 1980 = 100 and the other for 1989-1992 with base 1990 = 100) published in various issues of ABS publications. Create a new CPI series for the period 1985-1992 with 1990 as the base year. \[\begin{array}{l} \text { Consumer price index with different base periods, Australia }\\ \begin{array} { | c | c | c | } \hline \text { Year } & \begin{array} { c } \text { Baseperiod } \\ ( \mathbf { 1 9 8 0 } = \mathbf { 1 0 0 } ) \end{array} & \begin{array} { c } \text { Base period } \\ ( \mathbf { 1 9 9 0 } = \mathbf { 1 0 0 } ) \end{array} \\ \hline 1985 & 148.7 & \\ \hline 1986 & 162.6 & \\ \hline 1987 & 174.5 & \\ \hline 1988 & 187.3 & \\ \hline 1989 & 202.3 & 95.0 \\ \hline 1990 & & 100.0 \\ \hline 1991 & & 105.3 \\ \hline 1992 & & 107.3 \\ \hline \end{array} \end{array}\]

To construct the new series for the year

The Australian Bureau of Statistics regularly publishes the average retail prices of selected items for each Australian capital city. The following table presents the prices of oranges, bananas, potatoes, tomatoes, carrots and onions in Melbourne during the June quarter in 2012 and 2014. \[\begin{array}{l} \text { Fruit and vegetable prices } ( \$ / \mathrm { kg } )\\ \begin{array} { | l | c | c | } \hline \text { Item } & \text { June 2012 } & \text { June 2014 } \\ \hline \text { Oranges } & 2.98 & 2.95 \\ \hline \text { Bananas } & 2.32 & 2.37 \\ \hline \text { Potatoes } & 2.69 & 2.44 \\ \hline \text { Tomatoes } & 3.72 & 4.59 \\ \hline \text { Carrots } & 2.20 & 1.95 \\ \hline \text { Onions } & 2.57 & 2.35 \\ \hline \end{array} \end{array}\] Construct the average of relative price indexes for the fruit and vegetable group for June 2014 (with base June 2012 = 100).

As the fruit and vegetable group is made

The table below is the Laspeyres price index for a basket of goods related to the Computer IT industry. \[\begin{array}{l} \begin{array} { | c | c | c | c | c | c | c | c | c | c | c | c | c | } \hline \text { Year } & 1988 & 1989 & 1990 & 1991 & 1992 & 1993 & 1994 & 1995 & 1996 & 1997 & 1998 & 1999 \\ \hline \text { Base } & & & & & & & & & & & & \\ 1988 & 100 & 101.5 & 104.2 & 103.9 & 106.2 & 107.8 & 107.9 & 108 & 1085 & 109 & 110 & 111.5 \\ \hline \end{array}\\ \begin{array} { | c | c | c | c | c | c | c | c | c | c | c | c | c | } \hline \text { Year } & 2001 & 2002 & 2003 & 2004 & 2005 & 2006 & 2007 & 2008 & 2009 & 2010 & 2011 & 2012 \\ \hline \text { Base } & & & & & & & & & & & & \\ 1988 & 112.4 & 113.1 & 114 & 115.4 & 117 & 119.2 & 121.6 & 123.8 & 124.9 & 125.6 & 129.3 & 132.8 \\ \hline \end{array} \end{array}\] (a) Calculate and interpret the percentage price change from 2005 to 2013, using the 1988 base index. (b) Change the base of this index series to 2005. Explain why a base change may be useful. (c) Using the series with base 2005 that you created in part (b) recalculate the percentage price change from 2005 to 2013. Interpret. (d) Compare your answers from parts (a) and (c), in particular explain which value is a change in percentage points and which value is the percentage change.

@#IMG-DLM& (a) Percentage change = [(New - Old)/Ol

Exam 18: Index Numbers

The following are the two CPI series (one for 1985-1989 with base 1980 = 100 and the other for 1989-1992 with base 1990 = 100) published in various issues of ABS publications. Create a new CPI series for the period 1985-1992 with 1990 as the base year. Consumer price index with different base periods, Australia Year Baseperiod (=) Base period (=) 1985 148.7 1986 162.6 1987 174.5 1988 187.3 1989 202.3 95.0 1990 100.0 1991 105.3 1992 107.3

(Essay)

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Question 21

Which of the following statements is correct?

(Multiple Choice)

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Question 22

Real income is nominal income multiplied by the CPI (times 100).

(True/False)

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Question 23

Which of the following is the correct interpretation of a Laspeyres price index of 135, where the base year is 2007 and the current year is 2010?

(Multiple Choice)

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Question 24

An average of relatives price index is the ratio of the price of a commodity in the current period to its value in some base period, multiplied by 100.

(True/False)

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Question 25

The Australian Bureau of Statistics regularly publishes the average retail prices of selected items for each Australian capital city. The following table presents the prices of oranges, bananas, potatoes, tomatoes, carrots and onions in Melbourne during the June quarter in 2012 and 2014. Fruit and vegetable prices (\ /) Item June 2012 June 2014 Oranges 2.98 2.95 Bananas 2.32 2.37 Potatoes 2.69 2.44 Tomatoes 3.72 4.59 Carrots 2.20 1.95 Onions 2.57 2.35 Construct the average of relative price indexes for the fruit and vegetable group for June 2014 (with base June 2012 = 100).

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Question 26

The table below is the Laspeyres price index for a basket of goods related to the Computer IT industry. Year 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 Base 1988 100 101.5 104.2 103.9 106.2 107.8 107.9 108 1085 109 110 111.5 Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Base 1988 112.4 113.1 114 115.4 117 119.2 121.6 123.8 124.9 125.6 129.3 132.8 (a) Calculate and interpret the percentage price change from 2005 to 2013, using the 1988 base index. (b) Change the base of this index series to 2005. Explain why a base change may be useful. (c) Using the series with base 2005 that you created in part (b) recalculate the percentage price change from 2005 to 2013. Interpret. (d) Compare your answers from parts (a) and (c), in particular explain which value is a change in percentage points and which value is the percentage change.

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Question 27

Which of the following statements is correct?

Real income is nominal income multiplied by the CPI (times 100).

Which of the following is the correct interpretation of a Laspeyres price index of 135, where the base year is 2007 and the current year is 2010?

An average of relatives price index is the ratio of the price of a commodity in the current period to its value in some base period, multiplied by 100.

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