Price per Unit Units Produced 2007 2008 2009 2010 Blueberries 8 $2 $2 $2.1 $2.4 Pineapples 5 $2 $2.5 $2.5 $3 $4 Cheese 3 $2.5 $3 $3.5 If 2008 is the base year, the inflation rate between 2008 and 2009 is Select one: O a. 3.9% O b. 6.1% O c. 10.2% O d. 7.4%
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A: Inflation refers to the percentage change of consumer price indices of two years.
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A: CPI is measured using fixed basket of goods.
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A: Inflation refers to increase in the average price level of goods and services.
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- Compute the inflation rate for fruit prices from 2001 to 2004.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.Suppose that you just purchased a used carworth $8,000 in today’s dollars. Suppose also thatyou borrowed $8,000 from a local bank at 9% compounded monthly over two years. The bank calculated your monthly payment at $365.48. Assumingthat average general inflation will run at 0.5% permonth over the next two years,(a) Determine the monthly inflation-free interestrate (i′) for the bank.(b) What equal monthly payments (in terms of constant dollars over the next two years) are equivalent to the series of actual payments to be madeover the life of the loan?
- You would like to buy a house that is currently on themarket at $15,000, but you cannot afford it right now. However, you think that youwould be able to buy it after 15 years. If the expected inflation rate as applied to the priceof this house is 8% per year, what is its expected price after four years?Interest RatesSuppose that you make a loan of $1,500 to your friend at a rate of 10% interest because you expect the inflation rate to be 5%.a) By how much does your purchasing power increase once the loan is completely paid off?b) Assuming that after the loan was repaid, you discovered that inflation rate over the life of the loan was only 2%. Who gained?Answer the ff. 4. If the inflation rate is 5% per year and the cost of money is 16% per annum. how much Interest rate should a borrower be charged to Include the effect of inflation? 5. How much interest rate should a borrower be charge to take care of inflation. If the cost of money Is 18% per annum and annual Inflation rate is 7%?
- The total price of purchasing a basket of goods inthe United Kingdom over four years is: year 1=£940,year 2=£970, year 3=£1000, and year 4=£1070.Calculate two price indices, one using year 1 as the baseyear (set equal to 100) and the other using year 4 as thebase year (set equal to 100). Then, calculate the inflationrate based on the first price index. If you had used theother price index, would you get a different inflationrate? If you are unsure, do the calculation and find out.• The following table shows the price of a specific stereo receiver for a five-year period. o Using year 3 as the base year, calculate the price index for each year. o What is the accumulated rate of inflation from year 1 to year 4? o What is the most recent annual rate of inflation? Year. Price. Price index 1 $ 88 2 $100 3 $120 4 $132 5 $140The overall CPI in 2019 and 2020 are 120.2 and 123.3 respectively. What was the annual inflation rate from 2019-2020? a. 1.5% b. 2.6% c. 1.02% d. 2.0%
- Your rich aunt is going to give you an end-of-year gift of $1,000 for each of the next 10 years. Solve, a. If general price inflation is expected to average 6% per year during the next 10 years, what is the equivalent value of these gifts at the present time? The real interest rate is 4% per year. b. Suppose that your aunt specified that the annual gifts of $1,000 are to be increased by 6% each year to keep pace with inflation. With a real interest rate of 4% per year, what is the current PW of the gifts?In 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%6. Interest, inflation , and purchasing power Suppose Caroline is a sports fan and buys only baseball caps. Caroline deposits 2000 in a bank account that pays an annual nominal interest rate of 15%. Assume this interest rate is fixed-that is, it won't change over time. At the time of her deposit {comma} a baseball cap is priced at $20. Initially, the purchasing power of Caroline's 2000 deposit is baseball caps. For each of the annual inflationrates given in the following table, first determine the new price of a baseball cap, assuming it rises at the rate of inflation.then enter the corresponding purchasing of Caroline'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:Brown your answers in the first row down to the nearest baseball cap. For example, if you find that the deposit will cover 20.7 baseball caps, you would round to the purchasing power down…
