Bundle: Principles of Macroeconomics, Loose-Leaf Version, 7th + Aplia, 1 term Printed Access Card
7th Edition
ISBN: 9781305134935
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 11.2, Problem 2QQ
To determine
The calculation of present worth of paycheck.
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Consider a telephone call to London that currently would cost $5. If the real price oftelephone calls does not change in the future, how much will it cost you to make a call to London in 50 years if the inflation rate is 5% (roughly its average over the past 30 years)? What if inflation is 10%.
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Chapter 11 Solutions
Bundle: Principles of Macroeconomics, Loose-Leaf Version, 7th + Aplia, 1 term Printed Access Card
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- 16arrow_forwardMark Lai, a student of agricultural science in the developing country Mikatra, notes that the demand for rice increased substantially over the last ten years. He attributes this to the substantial growth in population during this period. Although rice cultivation in Mikatra is still labor-intensive, Mark observes that the inflation-adjusted wages for farm workers in the rice industry have more or less remained constant during this period, even though the supply of rice increased. This was contrary to Mark's expectations as inflation in Mikatra during this period was not very high. Which of the following, if true, is most likely to explain this outcome? A.Rice and other cereals form a smaller proportion of the food budget of higher-income individuals. B.The government of another major rice-producing country, Langun, subsidizes its rice farmers to keep its prices competitive in the global market. C.The government of Mikatra has recently set a price floor in the wheat market. D.Following…arrow_forwardThe Consumer Price Index (CPI) is a measure of the average change in price over time from a designated reference period, at which it equals 100. The index is based on prices of basic consumer goods and services. The table provided lists the CPI for several years from 1960 to 2012. If the price change in cars parallels the change in the CPI, what would a car sell for (to the nearest dollar) in 2012 if a comparable model sold for $7,500 in 1999? Year CPI 1960 29.6 1973 1986 44.4 109.6 156.9 1999 2012 229.6 In 2012, a car would sell for approximately $ 58,176 (Round to the nearest dollar.)arrow_forward
- Suppose you are a Social Security recipient. In 2006 you receive $700 per month in Social Security benefits. In October of that year the Social Security Administration announces that the cost-of-living adjustment for 2007 will be 3.2 percent, roughly matching the overall inflation rate. Instructions: Enter your response rounded to the nearest cent (two decimal places). a) How much will your 2007 monthly benefits be? $ b) In real terms, your benefits (Click to select) v Next 28 of 67arrow_forwardThe price of a typical laptop computer has fallen from $2,000 in 1985 to $800 today. At the same time, the consumer price index has risen from 100 to 252. Adjusting for inflation, how much did the price of laptops change? Does this answer seem right to you, or is it missing something? Explain your response.arrow_forwardIn 1954, Canadian Prime Minister Louis Stephen St. Laurent was paid a salary of $15 000. Stephen Harper, the Prime Minister in 2012, was paid $157 731. The price index for 1954 is 14.1 and the price index for 2012 is 121.7. What is, approximately, Prime Minister St. Laurent's salary equivalent in 2012 dollars? Help me.arrow_forwardLynda and Tom have data on the nominal price of a liter of milk in Germany in 1990 and 2010, respectively. They would like to calculate the present increase in the real price of milk over this time interval. To this end, Lynda uses a consumer price index (CPI) with the base year set at 1995 and Tom uses a CPI with the base year set at 2005. There was positive inflation between 1995 and 2005 of 3%. Based on this, it can be concluded:a) Tom and Lynda will reach the same calculation of the percentage increase in the real price of milkb) nothing can be concluded about their calculations without knowing the growth rate of real GDP between 1990 and 2010c) the nominal price of milk decreased between that 2 yearsd) Tom’s calculation of the percentage increase in the real price of milk will be higher than Lynda’se) Lynda’s calculation of the percentage increase in the real price of milk will be higher than Tom’sarrow_forwardSuppose you borrow $100 from a bank at 5 percent interest for 1 year and the inflation rate that year is 10 percent. Was this loan advantageous to you or the bank?arrow_forwardExplain how the removal of online purchase taxes on ICT devices may effect a country's inflation rate.arrow_forwardarrow_back_iosSEE MORE QUESTIONSarrow_forward_ios
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