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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.EconomicUse the following data: Base Inflation Rate = .4% Shortfall = 10% of Y, Shock Inflation Rate = 3% %3D %3D %3D 4. Calculate the Growth Inflation Rate 5. Calculate the Inflation Rate Use the following data: Inflation Rate 4.5% Shortfall = 8% of Y, Shock Inflation Rate = .5% %3D %3D 6. Calculate the Base Inflation Rate
- In the short-run you know that firms and households expect inflation of 3.6% next year. There are no supply shocks and cyclical unemployment is 1.09%. Lambda is 0.5. With this information, what is the inflation rate today? Write your answer as a percentage, round at one (1) decimal, and do not write the percentage sign. Use a minus sign if needed.There are two countries in the world, A and B. Suppose the central bank in country A has an annual inflation target pai = 0.02 while the central bank in country B has anannual inflation target pai = 0.03. In the long run, we would expect the nominalexchange rate of country A to appreciate against country B at a rate of about 1% per year.True or False? Explain.The table below reports the actual inflation rate from 2016 to 2020. Complete the table, assuming people form expectations adaptively. Give all answers to two decimals. Year 2016 2017 2018 2019 2020 Actual inflation rate 3% 4.50% 7.00% 6.00% 4.00% Expected inflation rate a) d) e) 3% 4.50% % % % b) c) f) Error 0% 1.00% % % %
- After graduating from college in 2010, Art Major's starting salary is $30757.00. Suppose Art Major has a cost of living adjustment (COLA) clause, or an escalator clause, in his labor contract so that he will be able to maintain this same level of purchasing power in real terms in 2011 and 2012. Using the information in the table, how much will Art Major earn in 2011 and 2012 if his salary keeps up with inflation? Round your answers to the nearest dollar. Year CPI 2010 103.77 2011 104.90 2012 111.17 What is Art Major's salary in 2011? 2$ 31092.25 What is Art Major's salary in 2012? 52686.74 IncoriectAfter graduating from college in 2010, Art Major's starting salary is $30757.00. Suppose Art Major has a cost of living adjustment (COLA) clause, or an escalator clause, in his labor contract so that he will be able to maintain this same level of purchasing power in real terms in 2011 and 2012. Using the information in the table, how much will Art Major earn in 2011 and 2012 if his salary keeps up with inflation? Round your answers to the nearest dollar. CPI 102.57 106.02 111.17 What is Art Major's salary in 2011? Year 2010 2011 2012 What is Art Major's salary in 2012?If the expected inflation rate in 2010 was 10% and the real interest rate was 5% higher than the equilibrium interest rate, then the actual inflation rate was _____
- Explain Equivalence Calculations under Inflation?Macmillan Learning After graduating from college in 2010, Art Major's starting salary is $35757.00. Suppose Art Major has a cost of living adjustment (COLA) clause, or an escalator clause, in his labor contract so that he will be able to maintain this same level of purchasing power in real terms in 2011 and 2012. Using the information in the table, how much will Art Major earn in 2011 and 2012 if his salary keeps up with inflation? Round your answers to the nearest dollar. CPI 102.77 105.69 107.06 What is Art Major's salary in 2011? $ Year 2010 2011 2012 36784.62 Incorrect What is Art Major's salary in 2012? 37278.51Inflation can be caused either by rapid growth rate of aggregate demand or by sluggish growth of aggregate supply. True or False