Principles Of Economics, Ap Edition, 9781337292603, 1337292605, 2018
8th Edition
ISBN: 9781337292603
Author: Mankiw
Publisher: Cengage Learning (2018)
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Chapter 24, Problem 6CQQ
To determine
Calculation of nominal and real interest rate.
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You deposited $2,000 in a savings account,and an year after you have $2,100.Meanwhile the CPI rises from 200 to 204.In this case ,the nominal interest rate is ________percent,and the real rate interest is________percent.
a.1,5
b.3,5
c.5,1
d.5,3
Consider the following basket of student essentials:
2019 2020
Burritos $6.30 $6.60
Pizzas $9.90 $10.00
Movie Tickets $10.00 $10.50
Energy Drinks $4.99 $5.99
a. Using 2019 as the base year, what is the CPI in 2019?
b. Assume students buy 30 burritos, 25 pizzas, 15 movie tickets, and 200 energy drinks each year. What is the CPI in 2020 using 2019 as a base year? What is the inflation rate? Would this rate be higher or lower if students bought more energy drinks?
A low price level induces consumers
to save, which drives down the interest
rate.
9. In 1970, Mr. Sami earned $12,000; in
1980, he earned $24,000; and in 1990,
he earned $36,000. If the CPI was 40 in
1970, 60 in 1980, and 100 in 1990, then
in real terms, Mr. Sami's 's salary was
highest in *
O 1980 and lowest in 1990.
1990 and lowest in 1980.
1980 and lowest in 1970.
1990 and lowest in 1970.
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Chapter 24 Solutions
Principles Of Economics, Ap Edition, 9781337292603, 1337292605, 2018
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- 1. Seattle’s minimum wage for businesses with 501 employees or more as of January 2022 is $17.27 per hour (i.e., the nominal wage). If the January 2022 CPI is 281.148 according to Bureau of Labor Statistics (BLS), what is the real wage rate in 2022? Group of answer choices a. $6.14 b. $7.25 c. $16.28 d. $17.27 2. According to the circular flow diagram, if you decide to get a job and work (i.e., sell your labor) then you would go to: Group of answer choices a. factor markets b. firms c. goods market d. householdsarrow_forwardConsider an economy with only two goods: bread and wine. Let's say that, in 2008' the typical family bought four loaves of bread at $1.50 per loaf and two bottles of wine for $9 per bottle. In 2018, let's say bread cost $4.50 per loaf and wine cost $16 per bottle (fictitious prices). The CPI for 2018 (using 2008 as base year) is approximately ..... Select one: a. 110. b. 239. c. 195. d. 208.arrow_forwardFrank is lending $1,000 to Sarah for two years. Frank and Sarah agree that Frank should earn a 2 percent real return per year. Instructions: Enter your responses as as whole numbers. a. The CPI (times 100) is 100 at the time that Frank makes the loan. It is expected to be 110 in one year and 121 in two years. What nominal rate of interest should Frank charge Sarah? The nominal rate of interest charged should be %. b. Suppose Frank and Sarah are unsure what the CPI will be in two years. How should Frank index Sarah's annual repayments to ensure that he gets an annual 2 percent real rate of return. Frank should charge Sarah) % (Click to select) the inflation rate.arrow_forward
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