The price index of an economy was 1.25 in year 0. The general inflation rate between years 0 and 1 was -4%. What is the price index of that economy in year 1? O a. 1.20. Ob. 1.30. O. 1.00. O d. 1.10. O e. None of the alternatives is correct.

The price index of an economy was 1.25 in year 0. The general inflation rate between years 0 and 1 was -4%. What is the price index of that economy in year 1? O a. 1.20. Ob. 1.30. O. 1.00. O d. 1.10. O e. None of the alternatives is correct.

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter6: How Statisticians Measure Inflation

Section: Chapter Questions

Problem 6TY

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Question

The price index of an economy was 1.25 in year 0. The general inflation rate between years 0 and 1
was -4%. What is the price index of that economy in year 1?
O a. 1.20.
O b. 1.30.
O. 1.00.
O d. 1.10.
O e. None of the alternatives is correct.
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