Inflation rate Figure 33-8 E C B Unemployment rate In Figure 33-8, policymakers can choose which of the following points as sustainable inflation-unemployment combinations? Only E A or B A, B, C, D, E B. E. C

The total price of purchasing a basket of goods in the United Kingdom over four years is: year 1=940, year 2=970, year 3=1000, and year 4=1070. Calculate two price indices, one using year 1 as the base year (set equal to 100) and the other using year 4 as the base year (set equal to 100). Then, calculate the inflation rate based on the first price index. If you had used the other price index, would you get a different inflation rate? If you are unsure, do the calculation and find out.

Do neoclassical economists see a value in tolerating a little more inflation if it brings additional economic output? Explain your answer.

If, over time, wages and salaries on average rise at least as fast as inflation, why do people worry about how inflation affects incomes?