EP ECONOMICS,AP EDITION-CONNECT ACCESS
20th Edition
ISBN: 9780021403455
Author: McConnell
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 36, Problem 10RQ
To determine
The impact of inflation on the firm’s profit.
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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%
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 percent
Suppose 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
1
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- Question 3 1. Suppose that inflation is 5% between years 1 and 2. Now suppose your hourly wage is $20/hour. What will your wage have to be for your real wage to stay the same from year 1 to year 2? O 20.10 O 30 O 25.75 O 21arrow_forwardSuppose, you are lending money to your friend Julia and you want a real rate of return of 8.00%. Furthermore, you expect the inflation rate to be 4.50%. Which of the following interest rates should you charge? O A. 6.25% O B. 12.50% O C. 8.00% O D. 3.50% Click to select your answer. lenovo V560arrow_forwardIn 2018, nominal gross domestic product (GDP) in the United States grew 5.2%. However, inflation was 2.4%. What was the real GDP growth rate O 0,5% 7.7% O 2.8% O 2.2%arrow_forward
- Suppose that the actual unemployment rate in a country is 7.7 percent. If the country's frictional unemployment rate is 3.5 percent and its structural unemployment rate is 1.1 percent, what is its cyclical unemployment rate? O 11.7 percent O 3.1 percent O 5.3 percent O 4.1 percent ۵arrow_forwardThe consumer price index was 100 in 1994 and 103.3 in 1995. Therefore, the rate of inflation in 1995 was about: O 3.3 percent O 2.8 percent O 4.4 percent 1 pts O 6 percentarrow_forwardAssume that the Phillips curve equation is represented by π = +0.1 - 2ut where π = 0-1. Suppose that 0 = 1 and the inflation rate is ₁ = 3% at t = 1. What is the actual rate of inflation for t = 3 if the government maintains an unemployment rate of 3% each period? O 11% O 3% O 15% 5% O 7%arrow_forward
- QUESTION 43 If the population of a country is 1,000,000 people, its labor force consists of 500,000, and 40,000 people are unemployed, the unemployment rate is: O 50.0 percent. 8.0 percent. 7.4 percent. 4.0 percent. QUESTION 44 Inflation is defined as: The level of prices at full-employment. An increase in the price of expensive items, such as cars. An increase in the average level of prices. An increase in relative prices. QUESTION 45 Over time, U.S. real GDP has increased: By small, constant increments. At a constant geometric rate. At an average rate of 3 percent per year. At an average rate of 7 percent per year.arrow_forwardIf the CPI increases from 135 in 2006 to 154 in 2007, the rate of inflation between 2006 and 2007 is: O 14.1 percent O 12.3 percent O 6.2 percent O 19.0 percentarrow_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_forward
- come is included 13. LAST WORD Assume that you borrow $5,000, and you pay back the $5,000 plus $250 in interest at the end of the year. Assuming no inflation, what is the real interest rate? What would the interest rate be if the $250 of interest had been dis- counted at the time the loan was made? What would the inter- est rate be if you were required to repay the loan in 12 equal monthly installments?arrow_forwardTable 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 bushelarrow_forwardIf the inflation rate is 3 percent and the nominal interest rate is 8 percent, how much is the after-tax real interest rate if the government imposes a 20 percent interest income tax? O a. 3.4 percent O b. 4 percent O c. None of the above O d. 5.4 percent.arrow_forward
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