You are given information on the consumer price index (CPI), where thevalues given are those for December 31 of each year.YearCPI1989126.11990133.81991137.91992141.91993145.8a. What was the inflation rate in each year?b. Mary bought a one-year government bond for $400 on Dec. 31, 1991.She received principal and interest totaling $436 on Dec. 31, 1992. Whatwas the nominal interest rate Mary earned on the bond? What was the realinterest rate Mary earned on the bond?c. The nominal income of an employee in GM on Dec. 31, 1990 was$60,000. What was his real income?d. The employee's income increased by 2% in 1991. Was the employeebetter off or worse off at the end of 1991 than the end of 1990? Explain.

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You are given information on the consumer price index (CPI), where the values given are those for December 31 of each year. Year CPI 1989 126.1 1990 133.8 1991 137.9 1992 141.9 1993 145.8

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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What is the Consumer Price Index (CPI)?
Suppose a basket of goods and services has been selected to calculate the CPI and 2016 has been selected as the base year. In 2014, the basket's cost was $50; in 2016, the basket's cost was $52; and in 2018, the basket's cost was $58. The value of the CPI in 2018 was ☀+ F6 106.0 104.0 111.5 6 116.0 Question 16 9 F7 Y K F8 & 7 U Q Search F9 * 8 F10 ( 9 F11 O ☆ F12 ) 0 10 pts Home End P + 11 Insert