Macroeconomics
10th Edition
ISBN: 9780134896441
Author: ABEL, Andrew B., BERNANKE, Ben, CROUSHORE, Dean Darrell
Publisher: PEARSON
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Chapter 1, Problem 3RQ
To determine
The concepts of inflation and deflation and the behavior of
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In every election year, politicians sing their own praises of having stabilized prices through the attainment of single digit inflation. As a macroeconomist, explain three policy measures that could be used to fight inflations
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the USA
Describe five economic effects of a continuous,
moderate inflation.
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- Identify and briefly describe some statistical index to measure the effects of inflation.arrow_forwardThe inflation rate in India was recorded at 4. 70 percent in May of 2013. Inflation Rate in India is reported by the Ministry of Commerce and Industry. Historically, from 1969 until 2013, India Inflation Rate averaged 7. 73 Percent reaching an all time high of 34. 68 Percent in September of 1974 and a record low of -11. 31 Percent in May of 1976. In India, the wholesale price index (WPI) is the main measure of inflation. The WPI measures the price of a representative basket of wholesale goods. In India, wholesale price index is divided into three groups: Primary Articles (20. 1 percent of total weight), Fuel and Power (14. 9 percent) and Manufactured Products (65 percent). Food Articles from the Primary Articles Group account for 14. 3 percent of the total weight. The most important components of the Manufactured Products Group are Chemicals and Chemical products (12 percent of the total weight); Basic Metals, Alloys and Metal Products (10. 8 percent); Machinery and Machine Tools (8.…arrow_forwardPlease explain the methodology behind the Consumer Price Index (CPI) calculation and assess the effectiveness of the index as a gauge of inflation.arrow_forward
- Which of the following economic changes are consistent with demand -pull inflation ? Check all that apply. Falling unemployment Falling economic output Excessive issuance of money by the central bankarrow_forwardWhich type of inflation is usually most pronounced during the expansionary phase of the business cyclearrow_forwardWhat are the various effects of high inflationarrow_forward
- Which of the following correctly shows the steps needed to calculate the inflation rate?arrow_forwardInflation is defined as a sustained increase in the price level. is this true or false?arrow_forwardWhich of the following groups would most likely be harmed by inflation? Group of answer choices spenders workers retirees none of the above Older people often reminisce about the “good old days” when prices were much lower. This is misplaced nostalgia primarily because in the “good old days” Group of answer choices prices were not really that low wages were much lower also When interest rates fall, investment expenditures by businesses Group of answer choices decrease increasearrow_forward
- What is the main measure used to track inflation in most countries? a) Gross Domestic Product (GDP) b) Consumer Price Index (CPI) c) Producer Price Index (PPI) d) Unemployment Rate When the rate of inflation exceeds the rate of interest, what is the likely effect on savers? a) Real interest rates increase b) Real interest rates decreasearrow_forwardDefine the term future inflation?arrow_forwardExplain three implications of increasing inflation.arrow_forward
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