Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN: 9781337091985
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 12, Problem 5PA
Subpart (a):
To determine
Relative
Subpart (b):
To determine
Relative price and inflation.
Subpart (c):
To determine
Relative price and inflation.
Subpart (d):
To determine
Relative price and inflation.
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Consider the effects of inflation in an economy composed of only two people: Larry, a bean farmer, and Megan, a rice farmer. Larry and Megan both always consume equal amounts of rice and beans. In 2016 the price of beans was $1, and the price of rice was $4.
Suppose that in 2017 the price of beans was $2 and the price of rice was $8.
Inflation was
.
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In this case, inflation was
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On the way into school you hear the following report on the radio: "inflation for the month of February was 0.4%. Over
the year inflation was 2.2%." Which of the following options best explains what these figures mean?
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Jim pays an inflation tax of $
Chapter 12 Solutions
Brief Principles of Macroeconomics (MindTap Course List)
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