(i)(ii)(iii)Given a consumer price index of 154.5 in the year 2019 and 165.3 in 2020,calculate the rate of inflation in 2020.The average price of a car was £35,650 in 2019. Calculate the revised price in2020 based on the rate of inflation calculated in part (i).Assume that in 2019 Robert has invested £2000 in a bank account, which paysan annual interest rate of 6%. After a year has passed, he is paid £120 ininterest. Explain whether Robert is now better off than he was the year beforebased on your answer in part (i).

The general increase in the price level is known as inflation. It is function of central bank to…

(i) (ii) Given a consumer price index of 154.5 in the year 2019 and 165.3 in 2020, calculate the rate of inflation in 2020. The average price of a car was £35,650 in 2019. Calculate the revised price in 2020 based on the rate of inflation calculated in part (i). (iii) Assume that in 2019 Robert has invested £2000 in a bank account, which pays an annual interest rate of 6%. After a year has passed, he is paid £120 in interest. Explain whether Robert is now better off than he was the year before based on your answer in part (i).

(i) (ii) Given a consumer price index of 154.5 in the year 2019 and 165.3 in 2020, calculate the rate of inflation in 2020. The average price of a car was £35,650 in 2019. Calculate the revised price in 2020 based on the rate of inflation calculated in part (i). (iii) Assume that in 2019 Robert has invested £2000 in a bank account, which pays an annual interest rate of 6%. After a year has passed, he is paid £120 in interest. Explain whether Robert is now better off than he was the year before based on your answer in part (i).

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter7: Unemployment And Inflation

Section: Chapter Questions

Problem 3.7P

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