5. From the basis of the following pieces of information, please give the exact equation of the SRAS in terms of inflation. i) i) Wage setting curve: W/P-1-2u+z Production function in the economy: Y=AN0.5
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- 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.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.Describe a situation, either a government policy situation, an economic problem, or a private sector situation, where using the CPI to convert from nominal to real would be more appropriate man using the GDP deflate:
- It is known that in an economy the standard basket is compound according to this table: Year Food Culture Ma Dwelling P₁ P₂ Q₂ 2019 3 5 3 1 2020 4 10 4 2 4 6 2021 4 10 4 3 Calculate a general price index, and obtain the inflation rate of the economy over time If there were only one nominal wage for all workers in this economy and this wage was 1,000 m.u in 2019, how much has to be the nominal wage in 2020 and 2021 to maintain their purchasing power Q₁ P3 4 4 Q3 3 3Suppose that inflation increases from Year #1 to Year#2 without growth. Which of the following graphs correctly shows this situation? (Note: Year #2 positions are shown with dark blue lines.) Price Level Price Level a Ps 0 1 LRAS QN Q₁ LRAS ON 0₁ A) Graph A B) Graph B C) Graph C D) Graph D SRAS SRAS UI SRAS, AD, (M-$800 billion; V - 3) MTD AD₂ (M-$820 billion; V = 3) SRAS, (c) MVT Real GDP AD₂ (M-$800 billion; V - 4) AD, (M-$800 billion; V - 3) Real GDP Price Level Price Level Qa 0 ON P₁ O -- 1 1 0₁ ON 2 -=-= LRAS 1 T LRAS 6 ở SRAS, SRAS₂ AD, (M-$800 billion; V-3) (b) AD₂ (M-$780 billion; V- 3) SRAS1 MIV SRAS2 (d) MV↓ Real GDP AD, (M-$800 billion; V-3) AD₂ (M-$900 billion; V=2) Real GDPThe table below shows the annual change in the average nominal wage and inflation rate since 2008. a. Compute the percentage change in real income for each year shown in the table. Instructions: In part a, round your answers to two decimal places. In parts b and c, enter your answers as a whole number. If entering a negative number, include a minus sign. Percentage Changes in Nominal Income and Prices Year 2008 2009 2010 2011 2012 2013 Annual Inflation Rate (percent) 3.92% -0.36 1.66 3.24 2.11 1.48 Annual Nominal Wage Growth (percent) 0.34% -1.24 -0.76 1.4 2.76 2.28 Annual Real Wage Growth (percent) (0.39) x % (0.88) ♥ 2.42 x 9.87 x b. Of the years listed above, the paycheck of the average worker declined in 2 c. Of the years listed above, the purchasing power of the average worker declined in of the six years. 4 of the six years. d. The average real income of households can increase whether the nominal wage increases or decreases
- Which of the following is NOT a step in calculating the inflation rate from one period to the next? Collect the prices from the stores where people shop. O Find out what people typically buy. Measure the change in quality of the products from one period to the other. Find the total value of the basket of goods and services.The table below shows the annual change in the average nominal wage and inflation rate since 2008. a. Compute the percentage change in real income for each year shown in the table. Instructions: In part a, round your answers to two decimal places. In parts b and c, enter your answers as a whole number. If entering a negative number, include a minus sign. Percentage Changes in Nominal Income and Prices Year 2008 2009 2010 2011 2012 2013 Annual Inflation Rate (percent) 3.78% -0.39 1.6 3.09 2.02 1.42 Annual Nominal Wage Growth (percent) 0.31% -1.1 -0.69 1.27 2.46 2.07 Annual Real Wage Growth (percent) b. Of the years listed above, the paycheck of the average worker declined in c. Of the years listed above, the purchasing power of the average worker declined in of the six years. d. The average real income of households can increase whether the nominal wage increases or decreases of the six years.1. Calculating inflation using a simple price index Consider an imaginary price index, the Undergraduate Price Index (UPI), created to represent the annual purchases made by a typical undergradute. The following table contains information on the market basket for the UPI and the price of each good in 2020, 2021, and 2022. The cost of each good in the basket as well as the basket's total cost are given for 2020. Perform these same calculations for 2021 and 2022, and enter the results in the following table Streaming services Iced coffees Textbooks Notebooks Energy drinks Total cost Price index Quantity in Basket 1 150 10 8 40 Suppose this price Index uses 2020 as the base year 2020 Price (Dollars) 64 2 80 2 3 Between 2020 and 2021, the UPI increased by Cost (Dollars) 64 300 800 16 120 1.300 100 Price (Dollars) 104 2 85 2 4 2021 In the last row of the cable, calculate and enter the value of the UPI for the remaining years Cost (Dollars) Price Cost (Dollars) (Dollars) 134 2 105 4 5 2022…
- 1. Calculating inflation using a simple price index Consider an imaginary price index, the Undergraduate Price Index (UPI), created to represent the annual purchases made by a typical undergradute. The following table contains information on the market basket for the UPI and the price of each good in 2020, 2021, and 2022. The cost of each good in the basket as well as the basket's total cost are given for 2020. Perform these same calculations for 2021 and 2022, and enter the results in the following table. Streaming services Iced coffees Textbooks Notebooks Energy drinks Total cost Price index Quantity in Basket 1 150 10 8 40 Price (Dollars) 64 2 Suppose this price index uses 2020 as the base year. 2020 80 2 3 Cost (Dollars) 64 300 800 16 120 1,300 100 Price (Dollars) 104 2 85 2 2021 Cost (Dollars) In the last row of the table, calculate and enter the value of the UPI for the remaining years. Between 2020 and 2021, the UPI Increased by 104 300 850 16 160 1,430 110) Between 2021 and…2. 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).#Question 2 explain with deatils 2. A dozen (12) eggs cost $0.90 in January 1980 and $2.50 in January 2020. The average wage for production workers was $7.50 per hour in January 1980 and $21.50 in January 2020. a) Calculate the price index for a dozen eggs in both years, using 1980 as the base year. Hint: Assume the “basket” only includes a dozen eggs. b) Calculate the inflation rate for eggs between 1980 and 2020. c) Calculate the price index for the average wage for production workers in both years, using 1980 as the base year. Hint: Assume the “basket” only includes the average wage. d) Calculate the inflation rate for the average wage between 1980 and 2020. e) For each year, how many minutes did a worker have to work to earn enough money to buy a dozen eggs? f) Based on your previous calculations, did the purchasing power of workers increase or decrease in 2020 (with respect to 1980)? Explain your answer.