In Brazil, the reference base period for the CPI is December 1993. In September 2000, prices had risen by 1,565.93 percent since the base period. The inflation rate in Brazil during the year ending September 2001 was 6.46 percent, and during the year ending September 2002, the inflation rate was 7.93 percent.
a) What is the CPI in Brazil for December 1993?
b) Calculate Brazil's CPI in September 2000, September 2001, and September 2002.
c) Is the price level in Brazil rising or falling?
d) Did Brazil's inflation rate increase or decrease in 2001 and in 2002?
e) Was the inflation rate in Brazil between 2000 and 2002 greater or less than the inflation rate in the United States?
a) To calculate the CPI in Brazil for December 1993, we need to set the CPI for that month as the base index with a value of 100.
b) To calculate Brazil's CPI in September 2000, September 2001, and September 2002, we need to use the given inflation rates.
To calculate the CPI in September 2000:
CPI September 2000 = Base CPI + (Inflation Rate x Base CPI) = 100 + (1,565.93% x 100) = 1,665.93
To calculate the CPI in September 2001:
CPI September 2001 = CPI September 2000 + (Inflation Rate x CPI September 2000) = 1,665.93 + (6.46% x 1,665.93) = 1,772.76
To calculate the CPI in September 2002:
CPI September 2002 = CPI September 2001 + (Inflation Rate x CPI September 2001) = 1,772.76 + (7.93% x 1,772.76) = 1,914.84
c) The price level in Brazil is rising because the CPI values are increasing over time.
d) In 2001, Brazil's inflation rate increased compared to the previous year. In 2002, the inflation rate continued to increase compared to the previous year as well.
e) To determine if the inflation rate in Brazil between 2000 and 2002 was greater or less than the inflation rate in the United States, we need the inflation rate data for the United States during the same period. Without this data, it is not possible to make a direct comparison.
a) To find the CPI in Brazil for December 1993, we need to know the price level at that time. However, the information provided does not give the specific price level for December 1993. Without this information, we cannot determine the CPI for that period.
b) To calculate Brazil's CPI for September 2000, September 2001, and September 2002, we can use the inflation rates provided.
- September 2000: To calculate the CPI in September 2000, we need to know the percentage change in prices since the base period (December 1993). According to the information given, prices had risen by 1,565.93 percent since the base period. We can then calculate the CPI as follows:
CPI September 2000 = CPI December 1993 + (CPI December 1993 * Percentage change in prices)
CPI September 2000 = CPI December 1993 + (CPI December 1993 * 1,565.93%)
CPI September 2000 = CPI December 1993 + (CPI December 1993 * 15.6593)
Without the specific value for the CPI in December 1993, we cannot calculate the CPI for September 2000.
- September 2001: We are given the inflation rate for the year ending September 2001, which is 6.46 percent. To calculate the CPI in September 2001, we can use the following formula:
CPI September 2001 = CPI September 2000 + (CPI September 2000 * Inflation rate)
CPI September 2001 = CPI September 2000 + (CPI September 2000 * 6.46%)
Without the specific value for the CPI in September 2000, we cannot calculate the CPI for September 2001.
- September 2002: We are given the inflation rate for the year ending September 2002, which is 7.93 percent. To calculate the CPI in September 2002, we can use the following formula:
CPI September 2002 = CPI September 2001 + (CPI September 2001 * Inflation rate)
CPI September 2002 = CPI September 2001 + (CPI September 2001 * 7.93%)
Without the specific value for the CPI in September 2001, we cannot calculate the CPI for September 2002.
c) Without knowing the specific CPI values, we cannot determine if the price level in Brazil is rising or falling.
d) Without specific CPI values, we cannot determine if Brazil's inflation rate increased or decreased in 2001 and 2002.
e) Without the inflation rate in the United States between 2000 and 2002, we cannot compare it to the inflation rate in Brazil for the same period.