Answered: Suppose the index of prices received by…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Question

Suppose the index of prices received by date farmers in Oman for 2008was 1.04 and the base year of index was 1999. Then,

OPTIONS:

(i) Relative to 1999, farm prices were 104% higher in 2008.

(ii) Relative to 2008, farm prices were 4% higher in 1999.

(iii) Relative to 2008, farm prices were 104% higher in 1999.

(iv) Relative to 1999, farm prices were 4% higher in 2008.

Expert Solution

Step 1

The price index of the country shows the average price level in the economy. The value of price index in base year is one. If the value of price index is greater than one then it indicates the inflation in the economy. On the other hand, if price index is lower than one then it shows the deflation in the economy.

Step by step

Solved in 2 steps

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions