Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN: 9781285165875
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 24.2, Problem 2QQ
To determine
The calculation of present worth of paycheck.
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Chapter 24 Solutions
Principles of Economics, 7th Edition (MindTap Course List)
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- The table below details Student A's monthly purchases during 2019 and 2020. Answer the following questions writing out dollars and cents for monetary values e.g. $1.00, item weights to two decimal places e.g. 0.10, price index values as whole numbers without decimals, e.g. 110, and percentages to one decimal place e.g. 1.0%. Hotdogs Cans of Cola Chocolate bars Magazines Movies Prices ($) 2019 2.70 1.30 1.00 6.50 6.00 2020 2.80 1.25 1.00 7.50 5.75 Quantities (# consumed per month) 2020 With 2019 as the base year this index has changed by 2019 2 16 7 3 2 1 18 7 a. The value of Student A's 2019 shopping basket using 2019 prices is $ The item weights associated with this shopping basket are for magazines, and for movies. b. The value of Student A's 2019 shopping basket using 2020 prices is $ If 2019 is used as the base year, the 2020 value of Student A's price index is 2 3 for hotdogs, for cola, for chocolate bars, and the 2019 value of this index is then % between 2019 and 2020.arrow_forward16arrow_forwardAre people worse off when the price level rises as fast as their income? Why do people often feel worse off in such circumstances.arrow_forward
- Mark Lai, a student of agricultural science in the developing country Mikatra, notes that the demand for rice increased substantially over the last ten years. He attributes this to the substantial growth in population during this period. Although rice cultivation in Mikatra is still labor-intensive, Mark observes that the inflation-adjusted wages for farm workers in the rice industry have more or less remained constant during this period, even though the supply of rice increased. This was contrary to Mark's expectations as inflation in Mikatra during this period was not very high. Which of the following, if true, is most likely to explain this outcome? A.Rice and other cereals form a smaller proportion of the food budget of higher-income individuals. B.The government of another major rice-producing country, Langun, subsidizes its rice farmers to keep its prices competitive in the global market. C.The government of Mikatra has recently set a price floor in the wheat market. D.Following…arrow_forwardThe Consumer Price Index (CPI) is a measure of the average change in price over time from a designated reference period, at which it equals 100. The index is based on prices of basic consumer goods and services. The table provided lists the CPI for several years from 1960 to 2012. If the price change in cars parallels the change in the CPI, what would a car sell for (to the nearest dollar) in 2012 if a comparable model sold for $7,500 in 1999? Year CPI 1960 29.6 1973 1986 44.4 109.6 156.9 1999 2012 229.6 In 2012, a car would sell for approximately $ 58,176 (Round to the nearest dollar.)arrow_forwardSuppose you are a Social Security recipient. In 2006 you receive $700 per month in Social Security benefits. In October of that year the Social Security Administration announces that the cost-of-living adjustment for 2007 will be 3.2 percent, roughly matching the overall inflation rate. Instructions: Enter your response rounded to the nearest cent (two decimal places). a) How much will your 2007 monthly benefits be? $ b) In real terms, your benefits (Click to select) v Next 28 of 67arrow_forwardLynda and Tom have data on the nominal price of a liter of milk in Germany in 1990 and 2010, respectively. They would like to calculate the present increase in the real price of milk over this time interval. To this end, Lynda uses a consumer price index (CPI) with the base year set at 1995 and Tom uses a CPI with the base year set at 2005. There was positive inflation between 1995 and 2005 of 3%. Based on this, it can be concluded:a) Tom and Lynda will reach the same calculation of the percentage increase in the real price of milkb) nothing can be concluded about their calculations without knowing the growth rate of real GDP between 1990 and 2010c) the nominal price of milk decreased between that 2 yearsd) Tom’s calculation of the percentage increase in the real price of milk will be higher than Lynda’se) Lynda’s calculation of the percentage increase in the real price of milk will be higher than Tom’sarrow_forwardSuppose you borrow $100 from a bank at 5 percent interest for 1 year and the inflation rate that year is 10 percent. Was this loan advantageous to you or the bank?arrow_forwardBy how much did the pace of tuition hikes exceed the 2016 average rate of inflation?arrow_forwardExplain how the removal of online purchase taxes on ICT devices may effect a country's inflation rate.arrow_forwardIs it possible for there to be inflation present in the economy and still witness a decline in a large number of goods? If so, how and why is this possible?arrow_forwardCongratulations! Your boss has given you a raise. However, you want to know whether your purchasing power has increased, since inflation is also rising. The table below gives you data for wages and the Consumer Price Index (CPI) for the last two years. Wage ($/day) CPI Year 1 $ 2000 CPI 120 Year 2 $2200 CPI 129.6 The nominal percentage increase in your wage is enter your response here%. (Round your answer to one decimal place.) Part 2 The real percentage increase in your wage is enter your response here%. (Round your answer to one decimal place.)arrow_forwardarrow_back_iosSEE MORE QUESTIONSarrow_forward_ios
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