MACROECONOMICS W/CONNECT
18th Edition
ISBN: 9781307253092
Author: McConnell
Publisher: Mcgraw-Hill/Create
expand_more
expand_more
format_list_bulleted
Question
Chapter 9, Problem 8RQ
To determine
The change in the real income of the consumer.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
1) Schnur's nominal income will go up by 12 percent next year. Inflation is expected to be -2 percent next year. By
approximately how much will Schnur's real income change next year? Show work
49. Assume that the inflation rate over a ten-year period is 15% in each year. Which of the following groups is going to be
hurt the most from this inflation?
A. Banks who make variable interest rate loans.
B. Persons who own lots of gold and land.
C. Retired persons living on fixed incomes.
D. Small business owners who can adjust their product prices.
Suppose you take out a multi-year loan from a bank with an intrest rate of 5%.
a. The rate you are paying is the (Click to select) v interest rate.
b. If the inflation rate is 2%, the real interest rate you are paying on the loan is
%.
c. Now suppose the following year there is unexpected inflation, and the price level increases by 7%. The real interest rate on your
loan that year would be
%.
d. Unexpected inflation hurts (Click to select)
v and helps (Click to select)
e. If lenders expect higher rates of inflation, they will charge (Click to select)
interest rates.
Chapter 9 Solutions
MACROECONOMICS W/CONNECT
Ch. 9 - Prob. 1DQCh. 9 - Prob. 2DQCh. 9 - Prob. 3DQCh. 9 - Prob. 4DQCh. 9 - Prob. 5DQCh. 9 - Prob. 6DQCh. 9 - Prob. 7DQCh. 9 - Prob. 8DQCh. 9 - Prob. 9DQCh. 9 - Prob. 10DQ
Ch. 9 - Prob. 11DQCh. 9 - Prob. 1RQCh. 9 - Prob. 2RQCh. 9 - Prob. 3RQCh. 9 - Prob. 4RQCh. 9 - Prob. 5RQCh. 9 - Prob. 6RQCh. 9 - Prob. 7RQCh. 9 - Prob. 8RQCh. 9 - Prob. 9RQCh. 9 - Prob. 10RQCh. 9 - Prob. 11RQCh. 9 - Prob. 1PCh. 9 - Prob. 2PCh. 9 - Prob. 3PCh. 9 - Prob. 4PCh. 9 - Prob. 5PCh. 9 - Prob. 6PCh. 9 - Prob. 7PCh. 9 - Prob. 8P
Knowledge Booster
Similar questions
- The index number representing the price level changes from 110 to 115 in one year and then from 115 to 120 the next year. Since the index number increases by five each year, is five inflation rate each year? Is the inflation rate the same each year? Explain your answer.arrow_forwardInflation rates, like most statistics, are imperfect measures. Can you identify some ways that the inflation rate for fruit does not perfectly capture the rising price of fruit?arrow_forwardIf 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 monthsarrow_forward
- The total price of purchasing a basket of goods in the United Kingdom over four years is: year 1=940, year 2=970, year 3=1000, and year 4=1070. Calculate two price indices, one using year 1 as the base year (set equal to 100) and the other using year 4 as the base year (set equal to 100). Then, calculate the inflation rate based on the first price index. If you had used the other price index, would you get a different inflation rate? If you are unsure, do the calculation and find out.arrow_forward4. If a gallon of gas cost $1.20 in 1997 and $2.20 in 2006, did it match, exceed, or was it less than the rate of inflation? Explain.arrow_forwardLast year the Carter family earned $50 000. This year their income is $52 000. In an economy with an inflation rate of 3 per cent, which of the following statements is correct? Select one: a. The Carters' nominal income and real income have both risen. b. The Carters' nominal income and real income have both fallen. c. The Caters' nominal income has risen and their real income has fallen. d. The Carters' nominal income has fallen and their real income has risen.arrow_forward
- Suppose that the nominal interst rate is 7 percent and the real interest rate is 5 percent. Instructions: round your answers to the nearest whole number. What is the inflation premium? (in percentage) Given the level of inflation, how many years would it take for the price level to double?arrow_forwardSuppose Julie's salary went from $45,000 to 13. $175,000 in 12 years. a. Assuming she got the same percentage raise each of those twelve years, show how to calculate that rate (r%). b. Assuming that inflation was about 3% per year for those twelve years, by what percent did Julie's "purchasing power" increase? Explain what you think "purchasing power" means.arrow_forwardNegative real interest rates occur when the inflation rate is greater than the nominal interest rate. True or false? a. False b. Truearrow_forward
- Q.1.5 If the inflation rate is 6% and Susan receives a 6% increase in income, then, overthe year, Susan’s:(2)(a) Real and nominal income both remain unchanged;(b) Real and nominal income both rise;(c) Real income rises but nominal income remains unchanged;(d) Nominal income rises but real income remains unchanged.arrow_forward12. Inflation a. Decreases everyone's nominal income. b. Decreases everyone's real income. c. Redistributes income in a manner in which the benefits of inflation to the community exceed the costs. d. Redistributes income in an arbitrary fashion.arrow_forward2. Compute inflation rates for the following cases. a. Calculate the one-period inflation rate for the US in 2022 given that the CPI in 2021 was 271.0 and the CPI in 2022 was 292.7. b. Using the CPI data table from question 1, calculate the average annual inflation rate from 1970 to 1990. (Hint- this will use the constant growth formula from Lecture 3). c. Using the CPI data table from question 1, calculate the average annual inflation rate from 2000 to 2020. (Hint- this will use the constant growth formula from Lecture 3).arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc
Principles of Economics 2eEconomicsISBN:9781947172364Author:Steven A. Greenlaw; David ShapiroPublisher:OpenStax
Brief Principles of Macroeconomics (MindTap Cours...EconomicsISBN:9781337091985Author:N. Gregory MankiwPublisher:Cengage Learning
Essentials of Economics (MindTap Course List)EconomicsISBN:9781337091992Author:N. Gregory MankiwPublisher:Cengage Learning
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc
Principles of Economics 2e
Economics
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:OpenStax
Brief Principles of Macroeconomics (MindTap Cours...
Economics
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Essentials of Economics (MindTap Course List)
Economics
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:Cengage Learning