Briefly explain whether you agree or disagree with thefollowing statement:"I don't believe the government price statistics. TheCPILOADING... for 2018 was 210, but I know that theinflation rateLOADING... couldn't have been as high as 110percent in 2018."Part 2A.Agree. A CPI of 210 is a 110% increase in the price level fromthe base year. The inflation rate in 2018 is 110%.B.Agree. A CPI of 210 is a 110% increase from 100, which isimpossible.C.Disagree. The inflation rate is the percentage increase in theprice level from the previous year, not the base year.D.Disagree. The inflation rate is always the same as the naturalrate of unemployment, which is about 5%.

Understanding the CPI and Inflation RateThe CPI (Consumer Price Index) is a measure of the average…

Answered: Briefly explain whether you agree or…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider the following price indexes: 90 in 2017, 100 in 2018, 110 in 2019, 121 in 2020, and 150 in 2021. Which year is likely the base year? What is the inflation rate from 2019 to 2020? If the cost of market basket in 2018 is $2,000, what is the cost of same basket of goods in 2017? 2021? Calculate...
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Suppose that people expect inflation to be 3 percent but that, in fact, prices rise by 10 percent. Briefly describe whether this unexpectedly high inflation would either a) help or hurt the following people, and b) why.a. A person receiving Social Security;b. A homeowner with a fixed-rate mortgage;c. a union worker in the second year of a labor contract with fixed wages;d. a family on food stamps (SNAP) who needs to buy groceries;e. a person trying to pay off their variable-rate charge cards;f. A restaurant that has not bought supplies yet and can't change the menu prices.
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.
please do all question answer And don,t do incorrect answer: Calculate the CPI of 2009. Calculate the inflation rate of 2009. If your salary in 2008 and 2009 was same, comment on your standard of living in these two years. If the bank interest rate was 9% in 2009, what was the real interest rate in 2009?
What information is given by the CPI? The CPI tells us _______. A. the price level in a given period expressed as a percentage of the price level in the base period, which equals zero B. the price level in a given period expressed as a percentage of the price level in the base period, which equals 100 C. the inflation rate in a given period compared to the inflation rate in the base period, which equals 100 D. the inflation rate in a given period compared to the inflation rate in the base period, which equals zero
Consider a simple economy that produces two goods: pencils and envelopes. The following table shows the prices and quantities of the goods over a three-year period. Price Year (Dollars per pencil) 2016 2 2017 4 2018 2 Year 2016 2017 2018 Pencils Use the information from the preceding table to fill in the following table. From 2017 to 2018, nominal GDP Quantity (Number of pencils) 125 135 125 The inflation rate in 2018 was Nominal GDP Real GDP (Dollars) (Base year 2016, dollars) GDP Deflator Price (Dollars per envelope) 3 3 3 and real GDP Envelopes Why is real GDP a more accurate measure of an economy's production than nominal GDP? Quantity (Number of envelopes) 155 O Real GDP includes the value of exports, but nominal GDP does not. Real GDP is not influenced by price changes, but nominal GDP is. Real GDP does not include the value of intermediate goods and services, but nominal GDP does. 210 165
ces For each of the following years, determine the real interest rate. Find the difference between this rate and the desired real interest rate and explain how any difference affects borrowers and lenders. Write out percentage rates as whole numbers e.g. 5%. a. In year 1, the nominal interest rate is 7%, the inflation premium on loans is 2%, and actual rate of inflation is 3%. The real interest rate is [ %, the desired real interest is b. In year 2, the nominal interest rate is 8%, the inflation premium The real interest rate is%, the desired real interest is %, borrowers are [(Click to select) and lenders are [(Click to select) is 3%, and the actual rate of inflation is 1%. ]%, borrowers are [(Click to select) and lenders are [(Click to select) is 1%. c. In year 3, the nominal interest rate is 6%, the inflation premium is 1%, and the actual rate of inflation The real interest rate is %, the desired real interest is %, borrowers are (Click to select) and lenders are (Click to select)
In detail, explain what is happening in this graph for Inflation rate based on CPI
Q3: Suppose in UAE consists of 200 books and 290 Computers The table below shows data on prices for Books and Computers in UAE for three years. Assume that the base year is 2015. Year Price of Books Price of Computers 2014 $1.40 200 2015 $1.10 140 2016 $1.10 200 a. Given this data, what is the price of the basket in 2014? b. What is the price of the basket in 2015? C. What is the inflation rate between 2014 and 2015? d. Suppose that the nominal interest rate in UAE is 10.4%. In addition, the inflation rate is equal to 4.2%. Given this information, what is the real interest rate in UAE?
Question # 3: The following table shows the cost of Airlines tickets from Washington To New York from 2014 to 2018. Year The cost of Airline tickets CPI 2014 $50 179.8 2015 $61 183.8 2016 $70 188.0 2017 $77 194.6 2018 $83 200.43 a- The average inflation rate f. b- The general inflation ratef. c- How many years will it take for the purchasing power to be one-half of what it is now?
1. The index number representing the price level changes from 110 to 115 in 2019, and then from 115 to 120 in 2020. Since the index number increases by 5 this year, is five the inflation rate each year? Is the inflation rate the same each year?. NOTE: Explain and support the answer with calculations.

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