Bundle: Principles of Economics, Loose-leaf Version, 8th + LMS Integrated MindTap Economics, 2 terms (12 months) Printed Access Card
8th Edition
ISBN: 9781337607735
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 30, Problem 5PA
Subpart (a):
To determine
Relative price and inflation.
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
.
Indicate whether Larry and Megan were better off, worse off, or unaffected by the changes in prices.
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Worse Off
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Now suppose that in 2017 the price of beans was $2 and the price of rice was $4.80.
In this case, inflation was
.
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Better Off
Worse Off
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Now suppose that in 2017, the price of beans was $2 and the price of rice was $1.60.
In this case,…
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?
Select one:
a. Inflation in February was much slower than it was in other months from the past year.
b. The prices of household necessities, excluded household luxuries, increased by 2.2%, compared to 12 months
ago.
c. The prices of the things a typical urban consumer buys, as estimated by the Bureau of Labor Statistics, increased
on average 2.2%, compared to 12 months ago.
d. The government increased prices by 2.2% over the past year in order to keep pace with production costs.
how important is the inflation for the common people in the community? explain.
Chapter 30 Solutions
Bundle: Principles of Economics, Loose-leaf Version, 8th + LMS Integrated MindTap Economics, 2 terms (12 months) Printed Access Card
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