ent the consumer price index. If the rate of inflation of the price nd the price index has a base value of 100 at time t = 0, solve for price index as a function of time. Sketch the time path of p(t).

Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter8: Economic Fluctuations, Unemployment, And Inflation
Section: Chapter Questions
Problem 12CQ
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Let p(t) represent the consumer price index. If the rate of inflation of the price index is constant at 5%
(i.e., = 5%), and the price index has a base value of 100 at time t = 0, solve for the expression showing
the consumer price index as a function of time. Sketch the time path of p(t).
Transcribed Image Text:Let p(t) represent the consumer price index. If the rate of inflation of the price index is constant at 5% (i.e., = 5%), and the price index has a base value of 100 at time t = 0, solve for the expression showing the consumer price index as a function of time. Sketch the time path of p(t).
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