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Q22 MCQ
Inflation is an increase in:
- a) the price of one item
- b) the average price level
- c) the average income level
- d) real GDP
Step by step
Solved in 2 steps
- An inflation rate of 2% in the USA (calculated using the Consumer Price Index) means that: both domestic and foreign products consumed in the USA have become more expensive by 2% compared to last year. b. only domestic products consumed in the USA have become more expensive by 2% compared to last year. only domestic products consumed in the USA have become more expensive by 2% compared to the base year. d. the GDP of the economy is growing at 2%.Suppose Ginny is an avid reader and buys only comic books. Ginny deposits $3.000 in a bank account that pays an annual nominal interest rate of 10%. Assume this interest rate is fixed-that is, it won't change over time. At the time of her deposit, a comic book is priced at $15.00. Initially, the purchasing power of Ginny's $3,000 deposit is comic books. For each of the annual inflation rates given in the following table, first determine the new price of a comic book, assuming it rises at the rate of inflation. Then enter the corresponding ourchasing power of Cinny's deposit ater one vear in the first row of the table for each inflation rate. Finally, enter the value for the real interest rate at each of the given inflation rates. Hint: Round your answers in the first row down to the nearest comic book. For example, if you find that the deposit will cover 20.7 comic books, yor would round the purchasing power down to 20 comic books under the assumption that Ginny will not buy…Here are values of the CPI (multiplied by 100) for each year from 1990 to 2000. For each year beginning with 1991, calculate the rate of inflation from the previous year. Instructions: Enter your responses rounded to one decimal place. Year CPI Inflation Rate (%) 1990 130.7 — 1991 136.2 1992 140.3 1993 144.5 1994 148.2 1995 152.4 1996 156.9 1997 160.5 1998 163.0 1999 166.6 2000 172.2
- Suppose Cho is a cinephile and buys only movie tickets. Cho deposits $3,000 in a bank account that pays an annual nominal interest rate of 10%. Assume this interest rate is fixed—that is, it won't change over time. At the time of her deposit, a movie ticket is priced at $15.00. For each of the annual inflation rates given in the following table, first determine the new price of a movie ticket, assuming it rises at the rate of inflation. Then enter the corresponding purchasing power of Cho's deposit after one year in the first row of the table for each inflation rate. Finally, enter the value for the real interest rate at each of the given inflation rates. Hint: Round your answers in the first row down to the nearest movie ticket. For example, if you find that the deposit will cover 20.7 movie tickets, you would round the purchasing power down to 20 movie tickets under the assumption that Cho will not buy seven-tenths of a movie ticket. Fill in the annual inflation chart Choices…The following table shows the typical market basket consumed in an economy as well as data on price for years 2001 to 2003. Use this table to calculate the inflation rate between 2001 and 2002. 2003 is the base year. Price in year Price in year Price in Year Items Quantities 2001 2002 2003 Pizza $10 $20 $0.50 $12 $25 $0.55 $11 $26 $1 10 T-shirts 10 Candy 100Study the associated figure. Adjusted for inflation, during which years during the period shown did the lowest gasoline prices occur? A) Gas was cheapest in 1998 - 1999 because the graph shows that the actual price of a gallon of gas was at its lowest in that time period. B) Gas was cheapest in 1998 - 1999 because the graph shows that the price of a gallon of gas in 2016 dollars was at its lowest in that time period. C) Gas was cheapest in 1980 - 1982 because the graph shows that the price of a gallon of gas in 2016 dollars was at its lowest in that time period. D) Gas was cheapest in 1950 - 1952 because the graph shows that the price of a gallon of gas in 2016 dollars was at its lowest in that time period.
- Suppose Rosa is a cinephile and buys only movie tickets. Rosa deposits $3,000 in a bank account that pays an annual nominal interest rate of 5%. Assume this interest rate is fixed-that is, it won't change over time. At the time of her deposit, a movie ticket is priced at $10.00. Initially, the purchasing power of Rosa's $3,000 deposit is movie tickets. For each of the annual Inflation rates given in the following table, first determine the new price of a movie ticket, assuming it rises at the rate of inflation. Then enter the corresponding purchasing power of Rosa's deposit after one year in the first row of the table for each inflation rate. Finally, enter the value for the real interest rate at each of the given inflation rates. Hint: Round your answers in the first row down to the nearest movie ticket. For example, if you find that the deposit will cover 20.7 movie tickets, you would round the purchasing power down to 20 movie tickets under the assumption that Rosa will not buy…The following table shows the annual inflation rate (the GDP deflator) of Japan, the UK, China, and South Sudan in the period 1996-2015 (Source World Bank 1996-2000 2001-2005 2006-2010 2011-2015 -1.9% -0.9% Japan UK -0.5% 1.6% 2.1% 1.7% 1.8% 1.8% China 8.1% 2.4% 2.1% 0.8% South Sudan 54.1% 6.5% 0.6% -18.7% Based on this information, which of the following statements is correct? O In Sudan Price level has always decreased between 1996 and 2015 The general price level decreased in China between 1996 and 2015 O China experienced disinflation between 1996 and 2015 O in the UK, the price of goods and services remained stable between 2001 and 2015The following table lists the per gallon prices of gas and milk for the months of April, May, and June. Assume that the typical consumer buys 60 gallons of gas and 4 gallons of milk each month, and that April is the base period. Month April May June Price of Gas (Dollars per gallon) 2.00 60.1% Refer to Table 25-3. What is the inflation rate for May? 67.2% -4.1% 10% 3.50 3.85 Price of Milk (Dollars per gallon) 3.50 3.52 3.58
- You and your spouse just adopted twin girls, little Heather and Beth. You want to make sure they are taken care of for the next 22 years. (A)Based on the following information, how much life insurance needs to be purchased for the husband using the income approach, if any? (B) How much, if any, needs to be purchased for the wife using the income approach? Assume 3% inflation rate. Market Labor Value Household Production Value Husband $72,000 $15,000 Wife $15,000 $40,000Suppose Dina is an avid reader and buys only comic books. Dina deposits $3,000 in a bank account that pays an annual nominal interest rate of 5%. Assume this interest rate is fixed—that is, it won't change over time. At the time of her deposit, a comic book is priced at $10.00. Initially, the purchasing power of Dina's $3,000 deposit is comic books. For each of the annual inflation rates given in the following table, first determine the new price of a comic book, assuming it rises at the rate of inflation. Then enter the corresponding purchasing power of Dina's deposit after one year in the first row of the table for each inflation rate. Finally, enter the value for the real interest rate at each of the given inflation rates. Hint: Round your answers in the first row down to the nearest comic book. For example, if you find that the deposit will cover 20.7 comic books, you would round the purchasing power down to 20 comic books under the assumption that Dina will not buy…The monthly market basket for consumers consists of pizza, t-shirts, and rent. The table below shows market basket quantities and prices for the base year (Year 1) and in the following two years. Product Pizza T-Shirts Rent Base Year (Year 1) Quantity 10 3 1 The inflation rate between Year 1 and Year 2 is The inflation rate between Year 2 and Year 3 is Price in the Base Year $3.50 $10.00 $500.00 Price in Year 2 $4.38 $9.00 $550.00 Price in Year 3 $4.73 $10.50 $600.00 %. (Round both answers to one decimal place.) %.