A generalization of the fisher effect that can be applied to other variables is the relationship between real price growth and nominal price growth if we know the inflation rate. We can express this relationship T, where g is the growth rate (real or nominal) and t is inflation rate. Use this as greal information for problems 10-12. gnomial - 10. Assume that data shows the nominal price of a new Nissan Maxima was $12,000 in 1992 and $15,000 in 2002, but you also found a reliable source that claimed real price growth for Maximas this claim about real price growth A) 16.5% B) 5% C) 10% D) 8.5% E) Not enough information to determine was closer to 8.5%. For experienced from 1992 to 2002? to be true, how much inflation was 11. Assume that the inflation rate is the level you found in 10. If the real price growth for a Mercedes- AMG was 10%, and the nominal price in 1992 was 2002? $42,000; what is the nominal price of the Mercedes in A) $50,000 B) $53,130 C) $56,750 D) $60,070 E) $77,000 12. For which car did the nominal price grow faster from 1992 to 2002? A) The Maxima B) The Mercedes C) Same nominal price growth

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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A generalization of the fisher effect that can be applied to other variables is the relationship between real
price growth and nominal price growth if we know the inflation rate. We can express this relationship
T, where g is the growth rate (real or nominal) and t is inflation rate. Use this
as
greal
information for problems 10-12.
gnomial -
10. Assume that data shows the nominal price of a new Nissan Maxima was $12,000 in 1992 and $15,000 in
2002, but you also found a reliable source that claimed real price growth for Maximas
this claim about real price growth
A) 16.5%
B) 5%
C) 10%
D) 8.5%
E) Not enough information to determine
was closer to 8.5%. For
experienced from 1992 to 2002?
to be true, how much inflation was
11. Assume that the inflation rate is the level you found in 10. If the real price growth for a Mercedes-
AMG was 10%, and the nominal price in 1992 was
2002?
$42,000; what is the nominal price of the Mercedes in
A) $50,000
B) $53,130
C) $56,750
D) $60,070
E) $77,000
12. For which
car did the nominal price grow faster from 1992 to 2002?
A) The Maxima
B) The Mercedes
C) Same nominal price growth
Transcribed Image Text:A generalization of the fisher effect that can be applied to other variables is the relationship between real price growth and nominal price growth if we know the inflation rate. We can express this relationship T, where g is the growth rate (real or nominal) and t is inflation rate. Use this as greal information for problems 10-12. gnomial - 10. Assume that data shows the nominal price of a new Nissan Maxima was $12,000 in 1992 and $15,000 in 2002, but you also found a reliable source that claimed real price growth for Maximas this claim about real price growth A) 16.5% B) 5% C) 10% D) 8.5% E) Not enough information to determine was closer to 8.5%. For experienced from 1992 to 2002? to be true, how much inflation was 11. Assume that the inflation rate is the level you found in 10. If the real price growth for a Mercedes- AMG was 10%, and the nominal price in 1992 was 2002? $42,000; what is the nominal price of the Mercedes in A) $50,000 B) $53,130 C) $56,750 D) $60,070 E) $77,000 12. For which car did the nominal price grow faster from 1992 to 2002? A) The Maxima B) The Mercedes C) Same nominal price growth
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