Suppose that over the past 10 years your yearly income has risen from $30,000 to $40,000. Overthe same period the price index has risen from 150 to 200. What has happened to your realincome over the same period?It has decreased.It has remained the same.It has increased.The correct answer cannot be determined because we don't know thebase year.

Real Income: It is the income after adjusting for the change in prices.

Answered: Suppose that over the past 10 years…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Elvira has a major building project. She will need to borrow money. If she can borrow money at a real interest rate of 3.5%, or less, the project will be profitable. However, if the borrowing is set at a real rate higher than 3.5%, the project will be a loss. The bank is offering her a rate of 13% currently. The CPI is due to be released tomorrow. The CPI from one year ago is 263.014. The current CPI is 284.55. Assume the bank's rate is 13% throughout, and the CPI from one year ago is the same at 263.014. Elvira expects tomorrow's CPI to be 290.35. Whether tomorrow's CPI is the same (284.55) or at Elvira's expectation (290.35) the rate is expected to continue. She must commit to the bank today or tomorrow. If she doesn't get the loan, she will be fired. Should she borrow now or wait for the release of CPI data? Why? What are the relevant numbers involved?
Suppose the Consumer Price Index in 2016 is 127.1 with 2002 as the base year a) What is the purchasing power of the dollar compared to 2002 b) What is the real income relative to 2002 of person whose income was $72500
David earned a salary of $43,500$43,500 in 1994 and $89,000$89,000 in 2010. The consumer price index was 148.2 in 1994 and 215.3 in 2010. David's 1994 salary in 2010 dollars is _.
On January 1, 2012, Albert invested $2,000 at 5 percent interest per year for three years. The CPI (times 100) on January 1, 2012, stood at 100. On January 1, 2013, the CPI was 106; on January 1, 2014, it was 112; and on January 1, 2015, the day Albert's investment matured, the CPI was 117. Find the real rate of interest earned by Albert in each of the three years and his total real return over the three-year period. Assume that interest earnings are reinvested each year and themselves earn interest. Hint: Calculate inflation and real interest for each year and then calculate it for the three years as a whole. Instructions: Enter your responses rounded to one decimal place. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. Year 2012 2013 2014 Real rate of interest Total real rate of return: -1% % % %.
Ten years ago, Ginny inherited $50,000 from her grandmother. She decided to invest all of this money in GE stock. Suppose she decides to sell the stock today so she can purchase her first home. The sale price of the stock is $64,500. Suppose that at the beginning of the ten year period the Consumer Price Index (CPI) was 125 and today the CPI is 215. Use this information to determine the difference between the initial investment in today's dollars and the sale price.
At the end of 1989, the consumer price index was 105. At the end of 1990, the CPI was 110. Calculate the inflation rate between these two periods.
Suppose that before the end of the year a typical consumer purchased 125 apples, 60 bananas, and 85 oranges. Year 1 Year 2 Price of apple Price of banana 0.75 $ 0.90 0.20 0.45 Price of orange 24 0.25 $ 0.60 What is the price index for year 2, using year 1 as the base year (round to the nearest full number)?
Answer please
In 2020, the value of the Consumer Price Index (CPI) in a certain country, Polonia, was 235 and median ( nominal) household income was $33,400. In 1950, the CPI was 89 and median (nominal) household income was $8,300. calculate median real household income in 1950, and in 2020, using 2020 as a base year
The CPI (using a 2020 base year) for 2000 is 65.0. Suppose a household's annual take-home pay in 2000 was $48,500. What would be an equivalent take-home pay in 2020?
Suppose your mother received a salary of $35,000 in 2000. To preserve the purchasing power, what should this salary be in 2020 if the CPI in 2000 was 120 and CPI in 2020 is 200. Show all your calculations.
The CPI in December of the year 2000 was equal to 174.6. In May of 2023, the most recent month available, the CPI was 304.2. If you made $35,000 in 2000, how much income would you have to make in March of 2023 to maintain the same purchasing power? Please show your work.

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