When inflation occurs, each dollar of income will buy more output than before. O all prices of all goods are rising. O the purchasing power of money increases. O the purchasing power of money decreases.
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- If inflation rises unexpectedly by 5, indicate for each of the following whether the economic actor is helped, hurt, or unaffected: A union member with a COLA wage contract Someone with a large stash of cash in a safe deposit box A bank lending money at a fixed rate of interest A person who is not due to receive a pay raise for another 11 monthsInflation represents the rate of increase of the average price of goods. If inflation decreases from 10% to 5%, does the average price of goods decrease? Explain.c) The government has released the latest retail price index which suggests inflation was1.62%. A typical basket of food at the supermarket this week costs £52.67. Calculate thecost of that typical basket:i) a year agoii) one month ago (assuming inflation occurs evenly throughout the year)
- If my nominal wages go up 5% this year and inflation is 2% this year, what happened? a) All of the choices are correct. b) I experience an increase in my both my nominal income and in my real income. c) My nominal wages increased more than the increase in the overall price level. d) My real wages increased by approximately 3%If inflation rises unexpectedly by 5%, indicate for each of the following whether the economic actor is helped, hurt, or unaffected: a. A union member with a COLA wage contract b. Someone with a large stash of cash in a safe deposit box c. A bank lending money at a fixed rate of interest d. A person who is not due tor receive a pay raise for another 11 monthsOver a long period of time, the price of a candy bar rose from $0.20 to $1.20. Over the same period, the consumer price index rose from 150 to 300. Adjusted for overall inflation, how much did the price of the candy bar change?
- Please provide examples, it is crucial. If inflation raises unexpectedly by 5% indicate for each of the following wether the economic actor is helped, hurt, or unaffected. A. A union member with a COLA wage contract B. A bank lending money at a fixed rate of interestSuppose a person works hard at a job after graduation and after her first year, her effort is rewarded with a 3% raise when the average wage increase in her company is 2%. Later, the government releases its inflation report and says that the inflation rate is 7%. Given this information, which of the following is true regarding her standard of living? Her standard of living has improved because the 3% raise is enough to offset the average rise in prices. Her standard of living did not improve because the purchasing power of her income is less than it was last year. Her standard of living has remained the same because the rate of inflation does not influence purchasing power. Her standard of living has increased by the amount of inflation, namely, 7%.Consider the effects of inflation in an economy composed of only two people: Larry, a bean farmer, and Megan, a rice farmer. Larry and Megan both always consume equal amounts of rice and beans. In 2016 the price of beans was $1, and the price of rice was $4. Suppose that in 2017 the price of beans was $2 and the price of rice was $8. Inflation was . Indicate whether Larry and Megan were better off, worse off, or unaffected by the changes in prices. Better Off Worse Off Unaffected Larry Megan Now suppose that in 2017 the price of beans was $2 and the price of rice was $4.80. In this case, inflation was . Indicate whether Larry and Megan were better off, worse off, or unaffected by the changes in prices. Better Off Worse Off Unaffected Larry Megan Now suppose that in 2017, the price of beans was $2 and the price of rice was $1.60. In this case,…
- Ongoing inflation does not automatically reducemost people’s incomes becausea. the tax code is fully indexed for inflation.b. people respond to inflation by holding less money.c. wage inflation goes together with price inflation.d. higher inflation lowers real interest rates.If inflation rises unexpectedly by 5%, indicate foreach of the following whether the economic actor ishelped, hurt, or unaffected:a. A union member with a COLA wage contractb. Someone with a large stash of cash in a safedeposit boxc. A bank lending money at a fixed rate of interestd. A person who is not due to receive a pay raise foranother 11 monthsInflation is expected to be 3% in the coming year. If Mr. Gonza earned $45,000 this year, how much must he earn in the following year to keep up with inflation and maintain a balance between his income and his increasing expenditures? (Show all work.)
