Table 25-4Will's expenditures on food for three consecutive years, along with other values, are presented in the following table.Expenditures on foodConsumer price indexIcon KeyRefer to Table 25-4. Suppose Will's Year 1 food expenditures in Year 3 dollars amounted to $5,670. Suppose also that the real interest rate in Year 3 was 3percent. Then, in Year 3.O a. the inflation rate was 8 percent and the nominal interest rate was 11 percent.O b. the inflation rate was 8 percent and the nominal interest rate was 5 percent.O c. the inflation rate was 9 percent and the nominal interest rate was 6 percent.Od the inflation rate was 9 percent and the nominal interest rate was 12 percent.Year123$5,000 $5,800 $6,600160.0 168.0 X

Given,Year123expenditures on food$5,000$5,800$6,600Consumer price index160168xSuppose Will's year 1…

Table 25-4 Will's expenditures on food for three consecutive years, along with other values, are presented in the following table. Expenditures on food Consumer price index a. the inflation rate was 8 percent and the nominal interest rate was 11 percent, O b. the inflation rate was 8 percent and the nominal interest rate was 5 percent. Year 2 efer to Table 25-4. Suppose Will's Year : food expenditures in Year 3 dollars amounted to $5,670. Suppose also that the real interest rate in Year 3 was 3 ercent. Then, in Year 3. c. the inflation rate was 9 percent and the nominal interest rate was 6 percent. Od the inflation rate was 9 percent and the nominal interest rate was 12 percent. 1 3 $5,000 $5,800 $6,600 160.0 168.0 X

Table 25-4 Will's expenditures on food for three consecutive years, along with other values, are presented in the following table. Expenditures on food Consumer price index a. the inflation rate was 8 percent and the nominal interest rate was 11 percent, O b. the inflation rate was 8 percent and the nominal interest rate was 5 percent. Year 2 efer to Table 25-4. Suppose Will's Year : food expenditures in Year 3 dollars amounted to $5,670. Suppose also that the real interest rate in Year 3 was 3 ercent. Then, in Year 3. c. the inflation rate was 9 percent and the nominal interest rate was 6 percent. Od the inflation rate was 9 percent and the nominal interest rate was 12 percent. 1 3 $5,000 $5,800 $6,600 160.0 168.0 X

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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In 2019 and in 2020, consumers in Dexter purchased only books and pens. The prices and quantities for 2019 and 2020 are listed in the table. The reference base period for Dexter's CPI is 2019, and 2019 is also the year of the Consumer Expenditure Survey. What is the inflation rate in 2020? 2019 2020 Item Price Quantity Price Quantity Books $2 3 $4 5 Pens $8 8 $9 6 The inflation rate in 2020 is _______ percent. A. 5.0 B. 84.0 C. 120.0 D. 20.0
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3a. Suppose that the consumer price index was 100 on January 1st, 2000 and 110 on January 1st, 2001. Determine the inflation rate between the two dates. 3b. Ruben earned a salary of $50,000 in 2015 and $60,000 in 2018. The consumer price index was 150 in 2015 and 200 in 2018. What has happened to Ruben's nominal and real income from 2015 to 2018?
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