EP ECONOMICS,AP EDITION-CONNECT ACCESS
20th Edition
ISBN: 9780021403455
Author: McConnell
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 27, Problem 9DQ
To determine
The differences in nominal and real income.
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Assume that John has a car loan with a nominal interest rate of 4%. If the actual inflation rate is 3%,
then the real rate is
3%
4%
O 7%
O 1%
Table 24-2
The table below pertains to Pieway, an economy in which the typical consumer's
basket consists of 15 bushels of peaches and 10 bushels of pecans.
Year
Price of
Peaches
2012 $11 per bushel
2013 $9 per bushel
O 1.04 percent.
10 percent.
Price of
Pecans
Refer to Table 24-2. If 2012 is the base year, then the inflation rate in 2013 was
O 23.5 percent.
O 4.4 percent.
$6 per bushel
$10 per bushel
Suppose nominal GDP for an economy rose from $120 billion in 2016 to $150 billion in 2017 and
that the inflation rate over the same period was 5 percent. By what percentage did real GDP
increase between 2016 and 2017?
O 40%
O 35%
O 20%
O 30%
O 25%
Chapter 27 Solutions
EP ECONOMICS,AP EDITION-CONNECT ACCESS
Ch. 27 - Prob. 1DQCh. 27 - Prob. 2DQCh. 27 - Prob. 3DQCh. 27 - Prob. 4DQCh. 27 - Prob. 5DQCh. 27 - Prob. 6DQCh. 27 - Prob. 7DQCh. 27 - Prob. 8DQCh. 27 - Prob. 9DQCh. 27 - Prob. 10DQ
Ch. 27 - Prob. 11DQCh. 27 - Prob. 1RQCh. 27 - Prob. 2RQCh. 27 - Prob. 3RQCh. 27 - Prob. 4RQCh. 27 - Prob. 5RQCh. 27 - Prob. 6RQCh. 27 - Prob. 7RQCh. 27 - Prob. 8RQCh. 27 - Prob. 9RQCh. 27 - Prob. 10RQCh. 27 - Prob. 11RQCh. 27 - Prob. 1PCh. 27 - Prob. 2PCh. 27 - Prob. 3PCh. 27 - Prob. 4PCh. 27 - Prob. 5PCh. 27 - Prob. 6PCh. 27 - Prob. 7P
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- "If the consumer price index was 102 in the base year and 117 in the following year, the inflation rate was" O 15 percent. 14.7 percent. 7 percent. O 1.07 percent.arrow_forwardAssuming the nominal interest rate is positive, ceteris paribus, which of the following statements is correct? O a. If the nominal interest rate is 5 percent and the inflation rate is 2 percent, then the real interest rate is-3 percent. Ob. If the nominal interest rate is 4 percent and the inflation rate is 3 percent, then the real interest rate is 7 percent. O c. When the inflation rate is zero, ceteris paribus, the nominal interest rate will be less than the real interest rate. O d. When the inflation rate is positive, ceteris paribus, the real interest rate will be less than the nominal interest rate. Next pagearrow_forwardSuppose a person receives a 9% increase in pay when inflation is 8%. In this case, the nominal increase is ______________, and the real increase is If the employee overestimates the real gain, this would be an example of O 9%, 8%, price confusion O 9%, 8%, menu costs O 1%, 8%, shoe leather costs O8%, 1%, sticky wages O9%, 1%, employee misperceptions 1arrow_forward
- Suppose that the consumer price index at year-end 2008 was 140 and by year-end 2009 had risen to 154. What was the inflation rate during 2009? 7.1 percent 10 percent O 14.2 percent O 9.1 percentarrow_forwardQuestion 2 The GDP deflator in year 4 is 120 and the GDP deflator in year 5 is 130. The rate of inflation between years 4 and 5 is O -10%. O 7.7%. O 8.33%. O 10%.arrow_forward11. Suppose that the GDP deflator of a small country equals 200 at the end of 2018. If the inflation rate is 10% in 2019 and 5% in 2020, what is the value of the GDP deflator at the end of 2020? (round your answer to the nearest whole number) O. 215 O. 221 O. 231 O. 235 12. Most business economists and analysts prefer to use measures of "core" inflation, which typically remove which of the following volatile components? O. Energy O. Food O. Housing O. Energy and Foodarrow_forward
- .ull T-Mobile ? * 2:21 AM @ O 5% 4 A myopenmath.com How to calculate the inflation rate for food, 1913-2021 Start with the inflation rate formula: CPI in 2021/CPI in 1913 * 1913 USD value = 2021 USD value Then plug in historical CPI values from above. The CPI for Food was 9.923 in the year 1913 and 270.938 in 2021: 270.938/9.923 * $20 = $546.08 Therefore, according to the U.S. Bureau of Labor Statistics, $20 in 1913 has the same "purchasing power" as $546.08 in 2021 (in the CPI category of food). Use the highlighted info above to answer each question below. Round appropriately to the context. a. The absolute change in the cost of food from 1913 to 2021 was | 261.01 2$ Calculation: 261.015 b. The rate of change in the cost of food from 1913 to 2021 was $/yeararrow_forwardRefer to the information provided in Table 7.4 below to answer the questions that follow. Table 7.4 Good A Good B Good C Units Purchased 5 10 4 2010 $1.00 $2.00 $4.00 Price per Unit in 2011 $1.50 $2.50 $4.50 Refer to Table 7.4. If 2011 is the base year, the inflation rate between 2010 and 2011 is O 23.2%. O 20.4%. O 18.8%. O 14.1%. 2012 $1.50 $3.00 $5.00arrow_forwardGood Price in 2015 Price in 2016 A $2.10 $2.25 $5.10 $5.80 C $3.05 $2.90 Consider the prices of three goods as given in the table above. Who is likely to feel like the inflation rate is higher? O Someone who buys 10 units of A. 10 units of B, and 5 units of C O Someone who buys 2 units of A, 1 unit of B. and 2 units of C O Someone who buys only good C O Somcone who buys 10 units of A. 5 units of B. and 10 units of C « Previous Next C ASUS 13 14 15 f6 f9 f10 f11 B.arrow_forward
- Table 24-4 The table below pertains to an economy with only two goods - books and calculators. The fixed basket consists of 5 books and 10 calculators. Year 2006 2007 2008 Refer to Table 24-4. Using 2006 as the base year, the inflation rate is O a. 13.3 percent for 2007 and 14.8 percent for 2008. O b. 35 percent for 2007 and 14.8 percent for 2008. O c. 35 percent for 2007 and 55 percent for 2008. O d. 135 percent for 2007 and 155 percent for 2008. Price of books $24 30 32 Price of calculators $8 12 15arrow_forwardThe following table shows some values of the Consumer Price Index and the corresponding inflation rates for 2012-2015. Year CPI Inflation Rate 2012 229.6 2.1% 2013 233.0 2014 1.6% 2015 237.0 0.1% The value of the Consumer Price Index in 2014 was approximately. Select one: O a. 234.6 O b. 235.0 O c. 246.9 O d. 236.7arrow_forwardIf the Consumer Price Index changes from 118 in the year 2009 to 127 in the year 2011, the average rate of inflation per year over this two-year period is approximately O A. 7.6 percent. О В. 2.4 рercent. O C. 4.7 percent. O D. 8.7 percent. ОЕ. 3.7 регcent.arrow_forward
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