Question 5 5. How long would it take for the price level to double if inflationpersisted at (a) 2 percent per year, (b) 5 percent per year, and(c) 10 percent per year? LO9.3 b. demand-pullc. push-pullMcGrawHillE connectWhat term do economists use to describe this secondoutcome? LO9.35. How long would it take for the price level to double if inflationpersisted at (a) 2 percent per year, (b) 5 percent per year, and(c) 10 percent per year? LO9.36. If your nominal income rises by 5.3 percent and the price levelrises by 3.8 percent in some year, by what percentage will yourreal income (approximately) increase? If your nominal incomerises by 2.8 percent and your real income rises by 1.1 percent insome year, what is the (approximate) inflation rate? LO9.47. Suppose that the nominal inflation rate is 4 percent and the infla-tion premium is 2 percent. What is the real interest rate? Alter-natively, assume that the real interest rate is 1 percent and thenominal interest rate is 6 percent. What is the inflationpremium? LO9.48. If the inflation premium is 2 percent and the nominal interestrate is 1 percent, what is the real interest rate? What is the realinterest rate if the inflation premium is 3 percent while the nom-inal interest rate is 0.5 percent? LO9.4

Inflation Refers to the Inflation increase in the prices of commodities and services of day to day…

Answered: . How long would it take for the price…

. How long would it take for the price level to double if inflation persisted at (a) 2 percent per year, (b) 5 percent per year, and (c) 10 percent per year? LO9.3

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question 5

5. How long would it take for the price level to double if inflation
persisted at (a) 2 percent per year, (b) 5 percent per year, and
(c) 10 percent per year? LO9.3

b. demand-pull
c. push-pull
Mc
Graw
Hill
E connect
What term do economists use to describe this second
outcome? LO9.3
5. How long would it take for the price level to double if inflation
persisted at (a) 2 percent per year, (b) 5 percent per year, and
(c) 10 percent per year? LO9.3
6. If your nominal income rises by 5.3 percent and the price level
rises by 3.8 percent in some year, by what percentage will your
real income (approximately) increase? If your nominal income
rises by 2.8 percent and your real income rises by 1.1 percent in
some year, what is the (approximate) inflation rate? LO9.4
7. Suppose that the nominal inflation rate is 4 percent and the infla-
tion premium is 2 percent. What is the real interest rate? Alter-
natively, assume that the real interest rate is 1 percent and the
nominal interest rate is 6 percent. What is the inflation
premium? LO9.4
8. If the inflation premium is 2 percent and the nominal interest
rate is 1 percent, what is the real interest rate? What is the real
interest rate if the inflation premium is 3 percent while the nom-
inal interest rate is 0.5 percent? LO9.4

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