Assume that John has a car loan with a nominal interest rate of 4%. If the actual inflation rate is 3%, then the real rate is O 3% 4% O 7% O 1%
Q: The consumer price index for Planet Econ consists of only two items: books and sandwiches. In 2000,…
A: The consumer price index measures change in the price level of basket of goods and services in a…
Q: 2016 (base year) 2017 2018 Quantity Price Price Price Food 89 $2.35 $2.75 $3 Clothing 27 $12 $12.50…
A: Given, 2016 (base year) 2017 2018 Quantity Price Price Price Food 89…
Q: Yvonne takes out a fixed-interest-rate loan and then inflation turns out to be higher than she had…
A: Hi! Thank you for the question but as per the guidelines, We’ll answer the first question since the…
Q: 60) Suppose that the forecast for next year's annual inflation rate is a = 5%, and for the annual…
A: In economics, interest refers to the amount paid in excess of the principal amount by the borrower…
Q: If nominal interest rate is 20% and real interest rate 11% in the economy, what is the inflation…
A: The inflation rate is the rate at which the prices of products and services decline in the economy.
Q: If the CPI has a value of 150 today and the base year is 2000, then it costs Select one: O a. €l…
A: Answer is given below
Q: If the Consumer Price Index changes from 118 in the year 2009 to 127 in the year 2011, the average…
A: Measurement of consumer goods and services, such as transportation, food, and medical care, is known…
Q: In 2013, the price for a market basket of consumer goods is $1,600. In the base year, the cost of…
A: Price index shows how the average price of a market basket of goods changes over time.…
Q: Suppose the consumer price index (CPI) accurately measures inflation, and: In 1983 the CPI in the…
A: The inflation rate is the percentage change in difference between the consumer price index of the…
Q: If inflation is higher than anticipated, benefit(s) and if inflation is lower than anticipated,…
A: When actual inflation is higher than expected inflation, borrowers (debtors) benefit and lenders…
Q: There are 20 million people in the "relevant population" on the planet of Mandalore. 15 million of…
A: The labor force is the sum of unemployed and employed. The unemployment rate is the percentage of…
Q: Suppose the cost of the basket in Year 3 was $4,000 and the cost of the basket in the base year…
A: The Consumer Price Index (CPI) is a measure that examines the weighted average of prices of a basket…
Q: 1. Suppose that inflation is 5% between years 1 and 2. Now suppose your hourly wage is $20/hour.…
A: Inflation is an important concept in economics. It can be defined as an increase in the general…
Q: Suppose the cost of the basket in Year 3 was $4,000 and the cost of the basket in the base year…
A: Inflation measures the percentage(%) change in purchasing power(PP) of a particular currency. As the…
Q: Suppose you graduated from college in 2013 and received a starting offer of $70,000. What would your…
A: CPI is measured using fixed basket of goods of the base year.
Q: What determines a country's long run average Inflation rate? Select one: O a. The rate of inflation…
A: In an economy, the functioning and the importance of economic variables changes in the long-run, as…
Q: Table 6.2 Year CPI 1 150 154 152 4 156 160 Refer to Table 6.2. If a worker earned $40,000 years ago…
A: Here the used formula is: Adjustment to salary to keep up with inflation =(Salary in the year / CPI…
Q: Nominal output is measured in dollars and real output is measured in dollars. O A. current; base…
A: Option (A) is correct.
Q: Between October 2001 and October 2002, the CPI in Canada rose from 116.5 to 119.8 and the CPI in…
A: CPI = It is the index of the average price of a basket of goods and services bought by the consumer…
Q: Question 11 Madelynne F. deposits $1,000 in a savings account that pays an annual interest rate of 4…
A: PLEASE FIND THE ANSWER BELOW.
Q: in two years is P2,308. What is th inflation if the real rate of interest is 10%? 18. If the…
A: DISCLAIMER “Since you have asked multiple question, we will solve the first question for you. If…
Q: If the CPI increases from 135 in 2006 to 154 in 2007, the rate of inflation between 2006 and 2007…
A: CPI can be used to calculate the inflation between two period of time given the formula of…
Q: 13) Answer both parts A and B ) Refer to Table below. If 2007 is the base period, the price index in…
A: Inflation is the aggregate change in the level of prices in the economy. Inflation leads to a…
Q: Suppose a person's nominal income is $74,280 in the current year, and the CPI for the current year…
A: CPI stands for consumer price index. "CPI measures the aggregate price level in the economy."…
Q: f inflation is higher than anticipated, benefit(s) and if inflation is lower than anticipated,…
A: Inflation refers to the economic factors that will provide information about the actual purchasing…
Q: The adult population in a country is 50 million people. Survey shows hat there are 5 million…
A: Labor force= employed+unemployed = (30+5) million = 35 million
Q: If your nominal income is $80,000 and your real income in base year prices is $71,500, what is the…
A: Given data: Nominal income is $80,000. Real income is $71,500
Q: If the inflation rate is 7% per year, how many years will it take for the cost of something to…
A: Inflation is the rise in average general price level over period of time . Inflation is bad for…
Q: Suppose that the rate of inflation is reduced from six to one percent. Over this time, the…
A: The sacrifice ratio is a ratio that implies an effect on the total output or GDP of a nation due to…
Q: An Ihcrease of 3 percent in the inflation rate causes the natural level of output to O increase by 3…
A: The answer is - increase by an amount that cannot be determined from the data given
Q: The following table shows some values of the Consumer Price Index and the corresponding inflation…
A: From the given information we have to calculate the Consumer Price Index in the year 2014
Q: Demand-pull inflation is an inflation that results from an initial Select one: a. decrease in…
A: In an economy, inflation can occur due to various reasons and these reasons ar generally explained…
Q: Refer to the above information below to answer this question. Year Price Index 2015 110 2016 118…
A: Answer: option c (3.5%) Explanation: To find the inflation rate the following formula will be used:…
Q: Suppose, you are lending money to your friend Julia and you want a real rate of return of 6.50%.…
A: The formula for calculating normal interest rate is: Nominal interest rate = real interest…
Q: Let's assume that Enrique borrows $420,000 from the Bank of America and let's assume that the…
A: The real interest rate is actual earning on investment. The nominal interest rate does not tell us…
Q: Suppose the consumer price index (CPI) stands at 250 this year. If the inflation rate is 10 percent,…
A: Consumer Price Index or CPI is a statistical tool used to measure the value of a measured basket of…
Q: Suppose that you were born in 1999. Also, suppose that your mother received a $100 baby shower gift…
A: The Consumer Price Index measures the change in prices being paid by consumers for the services and…
Q: Suppose that the consumer price index at year-end 2008 was 140 and by year-end 2009 had risen to…
A: Consumer price index(CPI): - it is a measure of change in the price level, it measures the change in…
Q: 40. Year CPI 2006 100 2007 136 the rate of inflation for 2007 is О а. 36% O b. 3.6% O . 63% O d.…
A: 1) The rate of inflation is given as Rate of inflation in 2007= [(CPI2017-…
Q: Using the data in Table 8P - 3 , calculate the CPI and the inflation rate in each year, using 2010…
A: Calculation of Consumer price index and inflation rate is important part of understanding of the…
Q: Assume that the Phillips curve equation is represented by π = π +0.1 - 2ut where π = 0-1. Suppose 0…
A: The expected inflation is equal to the past year inflation.
Q: The Boskin Congressional Advisory Commission reported that the CPI overstated inflation by O 11…
A: Boskin Advisory Congressional commission was appointed in 1995 by US. The main aim of the commission…
Q: estion 8 Table 20-15 Nominal Average Hourly Earnings $10 Year CPI 2014 1.00 2015 10 1.05 2016 12…
A: According to the given table, needed information is: Nominal wage in 2014: $10 Nominal wages in…
Q: The GDP deflator in year 4 is 120 and the GDP deflator in year 5 is 130. The rate of inflation…
A: In given we have to find the rate of inflay between years 4 and 5 ?
Q: Table 6.2 Year CPI 150 154 152 156 160 Refer to Table 6.2. If a worker earned $40,000 years ago when…
A: The formula is: Adjustment to salary to keep up with inflation =(Salary in the year / CPI of the…
Q: n Completion Status: E. frictional, cyclical, and structural unemployment. QUESTION 6 Suppose an…
A:
Q: John borrowed $3,000 from his bank for one year at 4%. If the rate of inflation turned out to be 6%,…
A: Borrow = 3,000 Nominal Interest rate = 4% Inflation rate = 6%
Q: The price index was 140 in one year and 148.4 in the next year. What was the inflation rate? 8.4…
A: Inflation is the consistent rise in general price level over period of time . And inflation reduce…
Q: If the population of a country is 1,000,000 people, its labor for consists of 500,000, and 40,000…
A: Gradually we can say that unemployment refers to the situation in which actually people are…
Q: If period 1 is the base year, the bundle price of goods in period 1 is $200, and the bundle price of…
A: Price bundling (item packaging or item group evaluating) is a showcasing methodology that joins at…
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- The index number representing the price level changes from 110 to 115 in one year and then from 115 to 120 the next year. Since the index number increases by five each year, is five inflation rate each year? Is the inflation rate the same each year? Explain your answer.The consumer price index was 100 in 1994 and 103.3 in 1995. Therefore, the rate of inflation in 1995 was about: O 3.3 percent O 2.8 percent O 4.4 percent 1 pts O 6 percentIn 2008 the price index was calculated at 137.9 with 2003 as the base year. In 2009 the price index increased to 148.7. What was the inflation from 2008-2009? O 7.8% O 7.3% O 10.8%
- Interest, inflation, and purchasing power Suppose Diamond is a fashionista and buys only denim jackets. Diamond deposits $4,000 into a savings account that pays an annual nominal interest rate of 5%. Assume this interest rate is fixed, and so it will not change over time. On the day she makes her deposit, suppose that a denim jacket has a price of $20.00. Initially, Diamond's $4,000 deposit has a purchasing power of #________ denim jackets. For each of the annual inflation rates given in the following table, first determine the new price of a denim jacket, assuming it rises at the rate of inflation. Then enter the corresponding purchasing power of Diamond's deposit after one year in the first row of the table for each inflation rate. Finally, enter the value for the real interest rate at each of the given inflation rates. Hint: Round your answers in the first row down to the nearest denim jacket. For example, if you find that the deposit will cover 20.7 denim jackets, you…Using the data in Table 8P - 3 , calculate the CPI and the inflation rate in each year, using 2010 as a base year . [LO 8.2If the inflation rate is 3 percent and the nominal interest rate is 8 percent, how much is the after-tax real interest rate if the government imposes a 20 percent interest income tax? O a. 3.4 percent O b. 4 percent O c. None of the above O d. 5.4 percent.
- Use Table 8P - 5 to calculate core and headline inflation in each time frame relative to the base year, assuming that each category is weighted equally in the calcula tion of headline inflation . [LO 8.2 , 8.4 a. 2012 to a base year . b . 2016 to a base year . . 2012 to 2016.Bike Washer car TV Yr1 300 1560 5600 52 Yr2 310 1570 5610 53 Y3 325 1585 5650 54 Yr4 350 1610 5700 55 Using the information above -Give the consumer price index for years one, two, three, and four -State what the percent rate of change in the CPI/inflation will be from year 1 to year 2, from year 2 to year 3, from year 3 to year 4. (round to the whole number for all calculations and final answers)How many years will it take for the dollar's purchasing power to be one-thirdwhat it is now, if the general inflation rate is expected to continue at the rate of 7% for an indefinite period?(a) About 10 years(b) About 12 years(c) About 13 years(d) About 16 years
- 32. Suppose a person receives a 5% increase in pay when inflation is 4%. In this case, the nominal increase is__________ , the real increase is ____________, If the employee overestimates the real gain, this would be an example of___________. O. 9%, 4%, price confusion O. 5%, 1%, sticky wages O. 5%, 1%, employee misperceptions O. None of the other choices listed is correct. O. 5%, 4%, shoe leather costs 33. It is known that the method used by the BLS to calculate the U3 unemployment rate biases the results, All of the biases tend to cause the reported U3 statistic to be lower than what it really is. O. True O. Falsejust do 4 3) Suppose that on January 1, 2019 a bank lends $20,000 to a person. The bank and the individual both agree that the real interest rate charged on the loan should be 10% and the loan is going to be totally paid ($20,000 plus interest), in a one-time payment, on December 31, 2020. Suppose the two parties to this transaction can perfectly foresee what the inflation rate for this period is going to be. Given this information, what is the nominal rate the Bank has to charge on this loan? Assume that the CPI is computed at the beginning of each year. Nominal interest rate refers to the interest rate before taking inflation into account. Nominal can also refer to the advertised or stated interest rate on a loan, without taking into account any fees or compounding of interest. Therefore the interest charged by the bank is 10% only with no adjustments of inflation rate over the year. The amount of money charged by the bank as interest in one year equals to ; 20000$× 10/100= 2000$.…Assume that the economy has an annual inflation rate of 5 percent. Are the followinginvestments profitable in real terms? (d) The spot price of silver is $31 per ounce. You purchase 50 ounces of silver for $1,600,in order to compensate the merchant. Over the year, the spot price of silver rises to $34per ounce, and you are able to sell the silver you have at the spot price. (e) You purchase a Non-Fungible Token (NFT) for $98 million. The following year, you are able to sell it for $102.5 million.
