Homework Answers
17) Option B. Nominal income remains same but inflation rises which means with same nominal income less can be now purchased
18) Option C. It is an increase in overall price level or general price level
19) Option C. Those who save and lend find that the real value of savings has decreased
20) Option C. (100 - 80)/80 = 20/80 = 20%
21) Option A
22) Option D
23) Option C
24) Option C
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17. When the inflation rate rises, the purchasing power of nominal income: a remains unchanged. c....
1. The best definition of inflation is a(n): a temporary increase in prices. b. increase in...
1. The best definition of inflation is a(n): a temporary increase in prices. b. increase in the price of one important commodity such as food. c. persistent increase in the general level of prices as measured by a price index. d. increase in the purchasing power of the dollar. 2. Inflation: a. reduces the cost-of-living of the typical worker. b. is measured by changes in the cost of a typical market basket of goods between time periods. c. causes the...
ASSIGNMENT #5 9. One way the consumer price index (CPI) differs from the GDP chain price...
ASSIGNMENT #5 9. One way the consumer price index (CPI) differs from the GDP chain price index is that the CPI: uses current year quantities of goods and services b. a. includes separate market baskets of goods and services for both base and current years. includes only goods and services bought by typical urban consumers. d. C. is bias free. 10. Suppose a market basket of goods and services costs $1,000 in the base year and the consumer price index...
25. If you negotiated a salary based on an anticipated inflation rate of 4 percent, and the actual inflation rate...
25. If you negotiated a salary based on an anticipated inflation rate of 4 percent, and the actual inflation rate turned out to be 6 percent a. the purchasing power of your real wages would be more than you anticipated. b. your employer would have gained at your expense. c. your real wage will increase, but your nominal wage will decrease. d. the purchasing power of your wages will not change, since purchasing power is based on your nominal wage....
24. A reduction in therate of inflation is called: a. Deflation b. Disinflation c. Hyperinflation d....
24. A reduction in therate of inflation is called: a. Deflation b. Disinflation c. Hyperinflation d. Cost-push inflation. 25. Suppose your nominal income this year is 5 percent higher than last year. If the inflation rate for the period was 3 percent, then your real income was a. Increased by 1.67 percent b. Increased by 2 percent. c. Increased by 8 percent. d. Decreased by 0.6 percent.
Suppose that workers and firms perfectly forecast inflation, so that the real wage remains unchanged as...
Suppose that workers and firms perfectly forecast inflation, so that the real wage remains unchanged as the price level rises over time. Prices and wages rise at the same rate, which implies that the real wage stays constant. The following graph shows the aggregate demand curve (AD) in an economy in long-run equilibrium. Assume the natural rate of unemployment is 6%, and potential output is $50 trillion. Use the orange points (square symbol) to draw the aggregate supply curve in...
home poup poda 7. Define the following terms: a) Inflation. b) Disinlation- c) Deflation- d) Consumer...
home poup poda 7. Define the following terms: a) Inflation. b) Disinlation- c) Deflation- d) Consumer Price Index (CPI)- 8. List and explain the three types of inflation" Which is the WORST TYPE? WHY? 1. 2. 3. 9. Core Inflation excludes: 10, GIVEN: Nominal Income-S 400 Billion, CPI = 125 % Wo 11, GIVEN: Real Interest Rate-4 %, Inflation Premium-5 % Calculate the Nominal Interest Rate a bank should charge a borrower Show All Work! 12. Who is hurt by...
1. The index used to measure inflation is the a. consumer price index. b....
1. The index used to measure inflation is the a consumer price index. b. producer price index. c. wholesale price index. d. GDP deflator. 2. The price index in year 2 is 110 and the price index in year 3 is 115. The rate of inflation between years 2 and 3 is a. 1.04%. b. 2.04%. c. 4.17%. d. 4.55% 3. The situation that occurs when the inflation rate falls is called a. deflation b. disinflation c. stagflation d. inflation 4. The situation that occurs when the price level falls is called a. deflation b. disinflation c. stagflation d. inflation 5. The situation that occurs when...
Please answer 57-60 Use the following to answer questions 57-59: Year Consumer Price Index 2 tbase...
Please answer 57-60
Use the following to answer questions 57-59: Year Consumer Price Index 2 tbase year 57. (Ref 19.3 Table: The Consumer Price Index) Use Table: The Consumer Price Index. The approximate rate of inflation in year 3 is: A) 5% B) 10% C) 19%. D) 20% 58. (Ref 19.3 Table: The Consumer Price Index) Use Table: The Consumer Price Index. The approximate rate of inflation in year 5 is: A) 25% B) 10% C) 19% D) 20% 59....
If the nominal rate on your car loan is 3.95 percent and the rate of inflation...
If the nominal rate on your car loan is 3.95 percent and the rate of inflation is 5.2 percent then the real rate on the loan is negative. Select one: True False Harold goes to the grocery store to buy his month's supply of Coke. As he enters the soft drink section, he notices that the price of Pepsi has been reduced by 25 percent. He buys Pepsi instead of Coke. This represents the substitution bias that is a problem...
At an inflation rate of 9 percent, the purchasing power of $1 would be cut in...
At an inflation rate of 9 percent, the purchasing power of $1 would be cut in half in 8.04 years. How long to the nearest year would it take the purchasing power of $1 to be cut in half if the inflation rate were only 4 percent? a. 12 years b. 15 years c. 18 years d. 20 years e. 23 years Show work.
1. The best definition of inflation is a(n): a temporary increase in prices. b. increase in the price of one important commodity such as food. c. persistent increase in the general level of prices as measured by a price index. d. increase in the purchasing power of the dollar. 2. Inflation: a. reduces the cost-of-living of the typical worker. b. is measured by changes in the cost of a typical market basket of goods between time periods. c. causes the...
ASSIGNMENT #5 9. One way the consumer price index (CPI) differs from the GDP chain price index is that the CPI: uses current year quantities of goods and services b. a. includes separate market baskets of goods and services for both base and current years. includes only goods and services bought by typical urban consumers. d. C. is bias free. 10. Suppose a market basket of goods and services costs $1,000 in the base year and the consumer price index...
25. If you negotiated a salary based on an anticipated inflation rate of 4 percent, and the actual inflation rate turned out to be 6 percent a. the purchasing power of your real wages would be more than you anticipated. b. your employer would have gained at your expense. c. your real wage will increase, but your nominal wage will decrease. d. the purchasing power of your wages will not change, since purchasing power is based on your nominal wage....
24. A reduction in therate of inflation is called: a. Deflation b. Disinflation c. Hyperinflation d. Cost-push inflation. 25. Suppose your nominal income this year is 5 percent higher than last year. If the inflation rate for the period was 3 percent, then your real income was a. Increased by 1.67 percent b. Increased by 2 percent. c. Increased by 8 percent. d. Decreased by 0.6 percent.
Suppose that workers and firms perfectly forecast inflation, so that the real wage remains unchanged as the price level rises over time. Prices and wages rise at the same rate, which implies that the real wage stays constant. The following graph shows the aggregate demand curve (AD) in an economy in long-run equilibrium. Assume the natural rate of unemployment is 6%, and potential output is $50 trillion. Use the orange points (square symbol) to draw the aggregate supply curve in...
home poup poda 7. Define the following terms: a) Inflation. b) Disinlation- c) Deflation- d) Consumer Price Index (CPI)- 8. List and explain the three types of inflation" Which is the WORST TYPE? WHY? 1. 2. 3. 9. Core Inflation excludes: 10, GIVEN: Nominal Income-S 400 Billion, CPI = 125 % Wo 11, GIVEN: Real Interest Rate-4 %, Inflation Premium-5 % Calculate the Nominal Interest Rate a bank should charge a borrower Show All Work! 12. Who is hurt by...
Please answer 57-60
Use the following to answer questions 57-59: Year Consumer Price Index 2 tbase year 57. (Ref 19.3 Table: The Consumer Price Index) Use Table: The Consumer Price Index. The approximate rate of inflation in year 3 is: A) 5% B) 10% C) 19%. D) 20% 58. (Ref 19.3 Table: The Consumer Price Index) Use Table: The Consumer Price Index. The approximate rate of inflation in year 5 is: A) 25% B) 10% C) 19% D) 20% 59....
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