**Understanding Inflation and Real Salary Impact**The following question examines the concept of inflation and its impact on purchasing power:"The rate of inflation over the last two years has averaged 2% per year. At the same time, John feels like he is able to purchase fewer goods and services with his annual salary. Therefore:"- ○ John's real salary must have declined- ○ John must not have received any pay raises- ○ Both John's nominal and real salaries must have declined- ○ John's nominal salary must have declinedThis question helps students understand how inflation affects real and nominal salaries. It prompts a discussion on how the purchasing power of a salary might decrease even if the nominal amount stays the same, unless it adjusts for inflation.

The rate of inflation over the last two years has averaged 2% per year. Ati John feels like he is able to purchase fewer goods and services with his ann Therefore: John must not have received any pay raises Both John's nominal and real salaries must have declined O John's nominal salary must have declined O John's real salary must have declined

The rate of inflation over the last two years has averaged 2% per year. Ati John feels like he is able to purchase fewer goods and services with his ann Therefore: John must not have received any pay raises Both John's nominal and real salaries must have declined O John's nominal salary must have declined O John's real salary must have declined

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Year Price of Pizza Price of Beer 2010 $10 $15 2011 $12 $16 2012 $14 $17 Table 2. Let 2010 be the base yearUse the following market basket: 100 pizzas 300 cases of beerRefer to Table 2. What is the rate of inflation between 2010 and 2011? Question 23 options: a) 12% b) 5% c) 100% d) 9%
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Year | price of meat (per Kg) price of bread (per Kg) price of gas (per lt) housing price (monthly rent of 1 bd unit) $10 $20 S1.5 S1000 $12 S18 S1.5 $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. 10% 12% 6% 17%
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