Lynda and Tom have data on the nominal price of a liter of milk in Germany in 1990 and 2010, respectively. They would like to calculate the present increase in the real price of milk over this time interval. To this end, Lynda uses a consumer price index (CPI) with the base year set at 1995 and Tom uses a CPI with the base year set at 2005. There was positive inflation between 1995 and 2005 of 3%. Based on this, it can be concluded: a) Tom and Lynda will reach the same calculation of the percentage increase in the real price of milk b) nothing can be concluded about their calculations without knowing the growth rate of real GDP between 1990 and 2010 c) the nominal price of milk decreased between that 2 years d) Tom’s calculation of the percentage increase in the real price of milk will be higher than Lynda’s e) Lynda’s calculation of the percentage increase in the real price of milk will be higher than Tom’s
Lynda and Tom have data on the nominal
a) Tom and Lynda will reach the same calculation of the percentage increase in the real price of milk
b) nothing can be concluded about their calculations without knowing the growth rate of real
c) the nominal price of milk decreased between that 2 years
d) Tom’s calculation of the percentage increase in the real price of milk will be higher than Lynda’s
e) Lynda’s calculation of the percentage increase in the real price of milk will be higher than Tom’s
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