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.The inflation rate between Year 1 and Year 2 isThe inflation rate between Year 2 and Year 3 isProductBase Year (Year 1)QuantityPrice in thePrice inPrice inBase YearYear 2Year 3Pizza15$2.00$2.50$2.60T-ShirtsRent3$10.00$9.00$8.501$300.00$330.00$360.00%. (Round both answers to one decimal place.)%.

For calculating the inflation rate first we have to calculate the Consumer Price Index for the…

Answered: The monthly market basket for consumers…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Calculate inflation if real interest rate is 12% and nominal interest rate is 15%
Assume a constant inflation rate of 5% annually and 0% interest rate. Over a whole period of 14 years. A real estate investment after 4 years would consume 307,500$. Lasting to 10 years the income is a constant of 170,000$ each year. A) What would be the equivalence selling price for the real estate in year 0?
Year price of meat (per Kg) price of bread price of gas (per Kg) (per It) housing price (monthly rent of 1 bd unit) $1000 1 $10 $20 $1.5 2 $12 $18 $1.5 $1200 Suppose a consumer basket consists of 40 Kg meat, 50 Kg bread, 400 It gas, and a one bedroom apartment for one year. Using the table above, compute the inflation rate in this economy based on CPI between years 1 and 2. 17% 12% 6% 10%
Calculate the inflation-adjusted interest rate when the annualized inflation rate is 7.9% per year and the real interest rate is 3.6% per year. The inflation-adjusted interest rate is %.
Assume that a market basket necessary for consumption by a typical household in the economy consists of 300 sandwiches and 3 iPads. In year 2017 the price for one sandwich was $4, and the price of one iPad was $150. In year 2018, the price for one sandwich was $5, and the price of one iPad was $200. Assume that for our analysis we consider year 2017 as the base year. What is the rate of inflation from year 2017 to year 2018? a) 127.27% b) 27.27% c) 20% d) 75%
The following table shows a person's nominal and real wages for three years, as well as the price level (price index) for each year, using the first year as the base year. Fill in the blanks in the table. Then calculate the annual inflation rate for each year (not including the base year). Instructions: Round your answers to 2 decimal places. Nominal Wage ($) Real Wage ($) Inflation Rate (%) Year Price Level 1 7.00 140 5.00 2. 9.00 7.00 150.00 3 11 160.00 7.50
Sally will earn $30,000 this year and $40,000 next year. The real interest rate is 20% between this year and next year; she can borrow or lend at this rate. She has no wealth at the start of this year and plans to finish next year having consumed everything she possibly can. She would like to consume the same amount this year as next year. The inflation rate is 0%. (a) How much should Sally save this year? How much will Sally consume in each of the two years? (b) How would your answers change if the real interest rate was 40% ?
Last year the jones family earned $40,000. This year their income is $42,000. If the inflation rate was 10%, did the jones family experience an increase/decrease/no change in their Normal income? Did the jones family experience an increase/decrease/no change in the real income ?
Calculate the inflation rate when Nominal Interest rate is 7% and real interest rate is 2.5%
What is the approximate rate of inflation in year 3?
Imagine that you borrow $5,000 for one year and at the end of the year you repay the $5,000 plus $600 of interest. If the inflation rate was 4%, what was the real interest rate you paid?
Question 7 The price of a product was $0.88 in the year 2008 and $1.28 in the year 2018. What is the average annual inflation rate for this product? 3.82 % 3.68% 3.42 % 3.98 % Question 8 If the CPI for January 2008 is 208.837 and the CPI for December 2018 is 255.539, what is the average annual inflation rate (per year) from Jan 2008 to Dec 2018? (Hint: Calculate monthly inflation rate and then use annual effective interest rate) O 1.65 % ☐ 1.75% O 1.95 % O 1.85 %

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