Question

Question 31 1.67 pts The consumer price index changes from 123.0 to 142.9. By how much percentage wise should your employer increase your wage if he wants to keep your purchasing power constant? Round to two decimal places and do not enter a sign Next • Previous Not saved Submit Qul @ 5. *** 44 80 & 7 $ 4 % 5 8 9 6 2 3 P U Y T 0 W E K L H G F D F S V NM B

Answer 1

31)

CPI index changes from 123 to 142.9

Hence Inflation = (142.9 - 123)/123 = 16.28%

Hence Your wage must increase by 16.28% for your purchasing power to remain intact

32)

Here,

Principal lend = $1172

interest rate = 4.95%

Inflation = 2.79%

So money after 1 year = 1172*(1.0495) = $1230.014

Value of money after 1 year = 1172 * (1.0279) = $1204.6988

So Extra money in real terms = $1230.014 - $1204.6988 = 25.3152

33)

Higher consuer confidence causes higher demand of products thus demand shock