Suppose that the consumer price index (CPI) was 160 in 2004 and 166 in 2005, inflation7)during 2005 waszero; prices were stable.b.а.3.8 рercent.6 percent.d.с.66 percent.If the consumer price index (CPI) was 180 at year-end 2004 and 189 at year-end 2005,8)inflation during 2005 waszero; prices were stable during 2005.а.b.4.8 percent.5 percent.с.d.9 percent.Suppose a market basket of goods and services costs $1,000 in the base year and the consumerprice index (CPI) is currently 110. This indicates the price of the market basket of goods andservices is now$110.$1,000.$1,100.d.9)а.b.с.$1,225.

Inflation rate = ∆ in consumer price index / base year's consumer price index × 100

7) Suppose that the consumer price index (CPI) was 160 in 2004 and 166 in 2005, inflation during 2005 was zero; prices were stable. b. а. 3.8 percent. 6 percent. d. с. 66 рercent. If the consumer price index (CPI) was 180 at year-end 2004 and 189 at year-end 2005, 8) inflation during 2005 was zero; prices were stable during 2005. b. а. 4.8 percent. 5 percent. d. с. 9 percent. Suppose a market basket of goods and services costs $1,000 in the base year and the consumer 9) price index (CPI) is currently 110. This indicates the price of the market basket of goods and services is now $110. b. a. $1,000. $1,100. d. с. $1,225.

7) Suppose that the consumer price index (CPI) was 160 in 2004 and 166 in 2005, inflation during 2005 was zero; prices were stable. b. а. 3.8 percent. 6 percent. d. с. 66 рercent. If the consumer price index (CPI) was 180 at year-end 2004 and 189 at year-end 2005, 8) inflation during 2005 was zero; prices were stable during 2005. b. а. 4.8 percent. 5 percent. d. с. 9 percent. Suppose a market basket of goods and services costs $1,000 in the base year and the consumer 9) price index (CPI) is currently 110. This indicates the price of the market basket of goods and services is now $110. b. a. $1,000. $1,100. d. с. $1,225.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter18: Introduction To Macroeconomics: Unemployment, Inflation, And Economic Fluctuations

Section: Chapter Questions

Problem 13P

See similar textbooks

Similar questions

Suppose your nominal income rose by 5.3 percent and the price level rose by 3.8 percent in some year. Instructions: Round your answers to 1 decimal place. 1).By what percentage would your real income (approximately) increase? 2). If your nominal income rose by 2.8 percent and your real income rose by 1.1 percent in some year, what must have been the (approximate) rate of inflation? ( in percentage)
Price indices Consider an economy producing only three commodities: jeans, haircuts, and textbooks. The quantities and prices of each good produced in 2018 and 2019 are given below.2018 2019 Commodity Quantity Price Quantity PriceJeans Haircuts Textbooks100 $25 1200 $30 5000 $5 4000 $5 3000 $50 3000 $55(a) Taking 2018 as the base year, compute the price index in 2019. How does the implied overall inflation rate compare to the price growth experienced by each commodity? Which item’s price growth is closest to the overall inflation rate and why? (b) Compute the 2019 GDP deflator. How does the implied rate of price growth compare with the inflation rate computed in (a)? Why do they di↵er?(c) What is the growth rate of real GDP in this simple economy that is implied by each of these price indices?
A typical consumer in Microtania has a market basket consisting of 5 Lemons and 4 Peaches. The data table below provides information on Microtania’s prices of Lemons and Peaches in 2011 and 2012. 2011 2012Price per unit of Lemons $0.5 $0.7Price per unit of Peaches $0.4 $1.2What was the cost of the market basket in 2011? What was the cost of the market basket in 2012? What was the inflation rate in Microtania between 2011 and 2012?
Suppose the residents of country P consume only peaches and pecans. The table below shows the prices and quantity of peaches and pecans consumed for two consecutive years. Note that all prices are per bushel. Suppose that the typical consumer basket consists of 10 bushels of peaches and 15 bushels of pecans. Assume 2000 is the base year. Peaches Pecans Year Price Quantity Price Quantity 2000 $11 10 $6 10 2001 $9 20 $10 10 What was the inflation rate in 2001? a. 20 percent b. 10 percent c. 8 percent d. 16.7 percent
Suppose I lend my friend Peter $100 for one year, and he agrees to repay me with interest. We each have an expectation that the inflation rate over the coming year will be 5 percent, and so we agree that he will pay me back at a nominal rate of 7 percent interest. a) What real rate of return do I expect to receive? b) What happens if inflation turns out to be 8 percent over the year? Who is made better off and who is made worse off? c) What happens if inflation turns out to be 3 percent over the year? Who is made better off and who is made worse off?
Suppose that the nominal GDP in 2017 was $3,968 (in thousands) and 2018 is the base year. Nowthe nominal GDP for years 2018 and 2019 will be the sum of the nominal GDP of the previousyear and the cost-of-living adjustment (COLA.) for the current year. [COLAs per year are equalto the percentage increase of the rate of inflation.] When we calculate the nominal GDP this way,what is this economy’s real GDP each year?
Assume that in Azerbaijan, Alyana deposits $5,000 in the bank for a single year. Given the following cases, answer the questions. CASE 1: inflation = 0%, nominal interest rate = 5% CASE 2: inflation = 5%, nominal interest rate = 10% CASE 3: inflation = 10 %, nominal interest rate = 15% In which case does the real value of your deposit grow the most? Assume the tax rate is 30%. In which case do you pay the most taxes? Compute the after-tax nominal interest rate,then subtract inflation to get the after-tax real interest rate for both cases. Answer all parts
13. Which of the following cannot be used to measure inflation?a) GDP deflationb) Expenditure methodc) Producer price indexd) Consumer price indexWhich of the following equations in correct?a) Nominal interest rate = Real interest rate-Inflationb) Real interest rate = Nominal interest rate + inflationc) Real interest rate = Nominal interest rate x inflationd) Real interest rate = Nominal interest rate-inflation
The CPI tracks the average change in prices of a basket of goods and services overtime, whereas the UNRATE is the percentage of the labour force that is unemployed.By examining the cointegration between these two variables, you can gain insightsinto the relationship between inflation and unemployment in the US economy. Thequarterly series is complete and seasonally adjusted. a) From a theoretical perspective, are these two series expected to becointegrated? Justify your answer. b)How do expectations about future economic conditions influence the speed ofadjustment? Are there any other factors that might affect the speed of adjustment?
Bureau of Economic Analysis data show that with base year 2005 = 100, the GDP price index was 109.7 in the second quarter of 2009. In that same quarter, the PCEPI was 108.8. Given the further information that the prices of capital goods (investment) and foreign traded goods (exports and imports) increased at a slower pace than the prices of consumption goods and services, how would you explain the difference in the GDP price index and PCEPI measures of inflation? Choose the correct statement. A. The prices of government goods and services increased at the same pace as the prices of consumption goods. B. The prices of consumption goods increased at a faster pace than the prices of government goods. C. The prices of exports increased at the same pace as the prices of imports. D. The prices of government goods and services increased at a faster pace than the prices of consumption goods. E. The prices of capital goods and foreign traded…
Table 24-1The following table pertains to Pieway, an economy in which the typical consumer's basket consists of 15 bushels of peaches and 10 bushels of pecans. Year Price of Peaches (Dollars per bushel) Price of Pecans (Dollars per bushel) Year 1 11 6 Year2 9 10 Refer to Table 24-1. If Year 1 is the base year, then the inflation rate in Year 2 was a. 4.4 percent. b. 10 percent. c. 1.04 percent. d. 23.5 percent.
If your nominal income rose by 5.3 percent and the price level rose by 4.8 percent in some year, by what percentage would your real income (approximately) increase?Instruction: Round your answer to one decimal place. %If your nominal income rose by 2.8 percent and your real income rose by .9 percent in some year, what must have been the (approximate) rate of inflation?Instruction: Round your answers to one decimal place. %