ECON MACRO (with MindTap Printed Access Card) (New, Engaging Titles from 4LTR Press)
6th Edition
ISBN: 9781337408738
Author: William A. McEachern
Publisher: Cengage Learning
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Chapter 7, Problem 6P
To determine
Sources of inflation using aggregate
Introduction:
Aggregate demand is the total consumption (spending) of (on) the goods and services in the economy.
Aggregate supply is the total quantity of the goods and services produced in the economy.
Inflation refers to the percentage increase in the prices of the goods and services in the economy over the period of time.
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27 - Which of the following inflation shows that the rise in prices is due to costs?A) Creeping InflationB) Demand InflationC) Cost InflationD) Core InflationE) Hyper Inflation
Question 5
Table below shows the consumer price index for the year 2015 and 2016.
Year
Consumer Price Index (CPI)
2015
2016
124
135
(a)
Based on the table above,
i.
Calculate the rate of inflation for the year of 2016.
i.
Explain THREE (3) effects of inflation.
Suggest any FOUR (4) measures or policies that the government can
take to overcome the problem of inflation.
(b)
Chapter 7 Solutions
ECON MACRO (with MindTap Printed Access Card) (New, Engaging Titles from 4LTR Press)
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- Question 5 Inflation Suppose that inflation proceeds at a constant rate of 6% per year from mid-2015 through mid-2018. What will be the value of a dollar in mid-2018 in constant mid-2015 dollars? (round to 4 decimal places)arrow_forwardQuestion 9 The rate of inflation is the same each year in every country. True Falsearrow_forward19) The term inflation is used to describe a situation in which the overall level of prices and incomes in the economy is increasing. Select one: a. True b. Falsearrow_forward
- 4) Inflation will reduce workers' real wage and so decrease the number of available workers. This outcome is desirable when demand for workers declines and the worker are reluctant to have a cut in their nominal wage. demand for workers increases and the workers are reluctant to have a cut in their nominal wage. demand for workers declines and the workers are willing to have a cut in their nominal wage. demand for workers increases and the workers are willing to have a cut in their nominal wage.arrow_forward3 ways the government can lower inflation. Please include referencesarrow_forwardQuestion 23 If the inflation rate turns out to be less than was is expected to be, the clear winners are businesses. people on fixed incomes. borrowers. lenders.arrow_forward
- 2. Calculating and categorizing inflation This table indicates the historical level of the Consumer Price Index (CPI) for the United States for 1972, 1973, and 1974. Complete the table by (1) selecting the inflation rates for 1973 and 1974, and (2) indicating for each year whether there has been inflation, deflation, or hyperinflation. Year CPI Inflation Rate Change in Price Level 1972 41.8 1973 44.4 1974 49.3 What rates of inflation for 1975 would be consistent with disinflation between 1974 and 1975? Check all that apply. 61.0% 21.0% 10.8% 10.9% What rates of inflation for 1975 would be consistent with hyperinflation? Check all that apply. 30.1% 120.1% -100.1% 100.1%arrow_forward1.23 Demand-pull inflation can occur when.. a) There is a shortage of investment and investors bid up interest rates. b) Inventories shrink and consumers bid up prices. c) There is a surplus of resources and so wages are bid up by employers. d) Undesired investment occursarrow_forwardQuestion: Demand-pull inflation occurs when: A) Costs of production decrease B) Aggregate demand exceeds aggregate supply C) Consumer savings increase D) Government spending decreasesarrow_forward
- Question 12 If the inflation rate turns out to be greater than was is expected to be, the clear winners are businesses. lenders. borrowers. people on fixed incomes.arrow_forward1. In a specified year, nominal gross domestic product grew by 12 percent and real gross domestic product grew by 5 percent. What would be the inflation rate for this year? 7% -7% 8% 17% 2. Which of the following could result in simultaneous increases in unemployment and inflation? Which of the following could result in simultaneous increases in unemployment and inflation? An increase in the overall level of productivity A decrease in government spending A decrease in the money supply An increase in the expectations of future inflation 3. From 2017 to 2018, the unemployment fell from 4.3 to 3.9 percent while inflation fell from 3.2 to 1.4 percent. Which of the following is a valid reason behind these changes? Aggregate supply curve shifted to the right Aggregate supply curve shifted to the left Aggregate demand curve shifted to the right Aggregate demand curve shifted to the left 4. According to the law of diminishing marginal utility, which of the following choices…arrow_forwardQuestion 21 Inflation is an increase in the ___ average hourly wage rate. rate of growth of GDP. overall level of economic activity. general price level in the economy.arrow_forward
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