Fearing a recession, the government decides to give citizens a tax rebate to buy Christmas gifts. What is a possible outcome of this action? A.) Inflation increases B.) interest rates increase C.) interest rates decrease D.) Inflation decreases

Fearing a recession, the government decides to give citizens a tax rebate to buy Christmas gifts. What is a possible outcome of this action? A.) Inflation increases B.) interest rates increase C.) interest rates decrease D.) Inflation decreases

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter7: Inflation

Section: Chapter Questions

Problem 1SQP

See similar textbooks

Related questions

Q: At full employment, the expected inflation rate is A. higher than the inflation rate O B. equal to…

A: Full employment refers to an economic condition in which all available labour resources are being…

Q: 389. The economy is in a recession. And consumer spending for large appliances (such as…

A: The labor demand curve is a curve that shows the negative relationship between wage rate and…

Q: Inflation is defined as an increase in: real wages of workers. real GDP. the overall price…

A: The phenomenon of the rising general price level in the economy is known as inflation. Inflation is…

Q: a. Core inflation is the inflation that consumers feel when they buy their core products. b.…

A: In an economy, Inflation is a macroeconomic concept that is used to compare various economic…

Q: a)Suppose you earn a 3% wage increase from your employer. Then, the government releases economic…

A: We will use the Fisher equation & interest rate risk concepts to answer these questions.

Q: If the government wanted to reduce inflation in the economy, it could: a. Increase income transfers…

A: Fiscal policy refers to changes in government spending, taxes and transfers. It is imposed by the…

Q: Suppose Dalia is a sports fan and buys only football tickets. Dalia deposits $2,000 into a savings…

A: Dalia is a sports fan and buys only football tickets. Dalia has $2000 which he deposits into a…

Q: Question 11 of 25, Step 1 of 1 T A basket of goods and services is used to calculate the consumer…

A: The inflation rate refers to the pace at which the prices of goods and services within an economy…

Q: Jin manages a grocery store in a country experiencing a high rate of inflation. To keep up with…

A: Inflation is an economic term that describes the sustained increase in the general price level of…

Q: In the country of Solow, people buy only three things: food, rent, and luxury goods. Last year, the…

A: Answer: It is given that the price of luxury goods went down and the price of rent increased 5%. The…

Q: Officially consumer price inflation occurs when there is Inflation is measured by calculating A)…

A: C) an increase in the price level measured using CPI; the percentage change in a price index from…

Q: Inflation is expected to be 3% in the coming year. If Mr. Gonza earned $45,000 this year, how much…

A: Prices and the proportion of each commodity or service in a household's budget determine the cost of…

Q: In 1990 the Consumer Price Index (CPI) was 150. Today, the Consumer Price Index (CPI) is 250.…

A: Given Information: Current CPI = 250 Past CPI = 150 Inflation Rate = Current CPI – Past CPIPast…

Q: 4. Inflation rates, like most statistics, are imperfect measures. Can you identify some ways that…

A: Inflation:- Inflation can be explained as the rate at which prices go up over a specific timeframe.…

Q: Melanie decided to save 20% of her annual earnings for 10 years so she would have a down payment for…

A: In this case, after 5 years, deflation in the economy causes an increase in purchasing power of the…

Q: a) suppose a student in 2007 estimated that her expenses were distributed among the CPI categories…

A: Inflation refers to the gradual rise in general price level in an economy over a period of time .…

Q: When the increase in prices goes from 5% to 2%, this is referred to as: a) disinflation. b)…

A: Inflation refers to persistent rise in general level of price of goods and services.Inflation does…

Q: Jim holds $50,000 in money at the beginning of the year. The annual inflation rate is 2 percent, and…

A: Inflation tax signifies a fall in purchasing power of a given amount of money due to presence of…

Q: Which of the following statements is true? The consumer price index (CPI) measures changes in the…

A: Inflation is the general increase in prices(P) of services and items over time. The purchasing power…

Q: 1.As the inflation rate increases, the present value of a fixed payment receive in the future a)…

A: Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: The higher the expected rate of inflation, A) the lower is the nominal rate of interest.…

A: The term "expected rate of inflation" describes the anticipated rise in the average price of goods…

Q: Which statement best describes U.S. inflation between 1982 and 2000? A. It was virtually…

A: This question invites an exploration of the historical trends in U.S. inflation over a specific…

Q: If a bank expects inflation to increase in the near future, how will it respond? It will start…

A: Inflation's effects and the function of banks in the overall economy are strongly related. To…

Q: Suppose a person works hard at a job after graduation and after her first year, her effort is…

A: A consumer like the person in the question is never bothered about the money in numerical terms…

Q: Average inflation went up by 65.5% since the turn of the century while college tuition and fees…

A: Inflation Inflation is basicallly refers to the rate at which the value of a currency declines,…

Q: Suppose you have $100 saved in the bank at an annual saving rate of 5 percent today. Also, the…

A: Interest rate and the rate of inflation are more likely correlated. This implies that with an…

Q: Suppose that an increase in the cost of resources increases the cost of production for the U.S.…

A: In an economy, government has the responsibility to maintain the level of output and inflation level…

Q: Gina loans George $1,000. George agrees to pay her $1,100 next year. They both expect an inflation…

A: Real interest rate = nominal interest rate - inflation rate

Q: Using the following information about the CPI for an economy, what is the inflation rate for 2010?…

A: Inflation rate = CPIt- CPIt-1CPIt×100 where t is current year t-1 is previous year Real Interest…

Q: Your salary is currently $95,000. The CPI last year was 220 and the CPI today is 235. What should…

A: CPI measures the total cost of goods and services bought by a typical customer. The difference…

Q: 7) In 2010, a bottle of Coke cost $1. In 2020, it would cost $1.50. The CPI for 2020 was 260 and the…

A: CPI, consumer price index measures the cost of market basket of goods and services consumed by the…

Q: Inflation represents the rate of increase of the average price of goods. If inflation decreases from…

A: Inflation refers to the rise in general price level over period of time . Inflation reduces the…

Q: Whether you gain or lose during a period of inflation depends on: a) how the price increases affect…

A: During the period of inflation, the general price level will continuosly rising.

Q: The inflation rate for the current year is measured by which equation? (...using the CPI = consumer…

A: AS per BNED guidelines, the first question has to be answered from the multiple question (17)…

Q: Give an example of a good or service that has increased in price since the time when you were young.…

A: The consumer price index is a measure of inflation based on changes in the price level of a weighted…

Q: The president is impeached and removed from office: a)Inflation stays the same b)Inflation…

A: Impeachment process of the president of a country refers to the allegations or some charges that are…

Q: If the consumer price index (CPI) says that inflation equaled 10% last year, then the chained CPI…

A: The relationship between the Consumer Price Index (CPI) and the chained CPI lies in their…

Q: According to the textbook, the fully completed house that one could buy from the Sears catalog in…

Q: 3. Supply and demand for loanable funds The following graph shows the market for loanable funds in a…

A: Demand for loanable funds shows the negative relationship between interest rate and quantity of…

Q: Inflation measures the changes in the level of in the economy. Demand-pull inflation…

A: Inflation measures the rise in the general price of goods and services over a period of time.…

Q: Beth owns and operates a store in a country experiencing a high rate of inflation. In order to…

A: Inflation is a state of a nation in which the price level of the commodities and the services get…

Question

Fearing a recession, the government decides to give citizens a tax rebate to buy Christmas gifts. What is a possible outcome of this action?

A.)	Inflation increases
B.)	interest rates increase
C.)	interest rates decrease
D.)	Inflation decreases

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

4. Inflation rates, like most statistics, are imperfect measures. Can you identify some ways that the inflation rate for fruit does not perfectly capture the rising price of fruit?
to measure inflation? a.) consumer price index b.)demand -supply curve c.) stagnation d.)inflation rate
8. The price of oil in 2005 was 5067 per barrel. "This price is still lower than the price of oil in 1991" says a government publication. If inflation has averaged 3.2% per year from 1991 to 2020, what was the price per barrel of oil in 1991?
3. Economic fluctuations
The economy starts out at full-employment equilibrium. Some events then occur that generate cost-push inflation. Which of the following events might cause cost-push inflation? A. a decrease in exports. B. an increase in the money wage rate or firms raise prices C. an increase in the quantity of money. D. a decrease in government expenditure.
If the price level falls, then the value of a dollar: A. Rises so people will buy more B. Rises so people will buy less C. Falls so people will buy more D. Falls so people will buy less
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…
12. After several years of decline, the market for handmade acoustic guitars is making a comeback. These guitars are usually made in small workshops employing rela- tively few highly skilled luthiers. Assess the impact on the equilibrium price and quantity of handmade acous- tic guitars as a result of each of the following events. In your answers indicate which curve(s) shift(s) and in which direction.
a government is facing high inflation, then it will take an action as following: I. increase taxes, increase discount rate II. decrease taxes, decrease discount rate III. increase taxes, decrease discount rate IV. decrease taxes, increase discount rate
1. On an island off the coast of Peru, consumers buy only avocados and mangoes. This year, the CPI implied an annual inflation rate of 29.55%. A government study found that the average household consumes 5 avocados. If the price of avocados was $4 last year, $5 this year, and the price of mangos was $6 last year and $8 this year, how many mangoes are in the consumption basket? a. 10 b. 2 C. 5 d. 4
4. Good X Y Z Quantity 10 20 5 Price in 1999 $5 $10 $6 Price in 2000 $6 $10 $10 Assume year 2000 is the base year. a) Calculate the market basket value for each year. What is the consumer price index in 1999? b) What is the inflation rate between 1999 and 2000?