Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Question
Chapter 32, Problem 4.1P
To determine
Decision, expectation, and the housing market.
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Students have asked these similar questions
a)Suppose you earn a 3% wage increase from your employer. Then, the government releases economic data indicating the inflation rate is running at 5%. Are you better off? Based upon changes in your real wages, did your standards of living improve ? b) suppose you took out 20,000 in student loans at a fixed interest rate of 5%. Assume that after you graduate, inflation rises significantly as you are paying back your loans. Does this rise in inflation benefits you in paying back your student loans? Who hurt more from unexpected higher inflation, a borrower or a lender?
c) in January 1980 the CPI stood at 77.8. By January 2006 the CPI was 198.3. By what percent have consumer prices increased over this period? Assume college graduates entering the job market in 1980 were being paid on average $1200 per month. Assume college graduates entering the job market in 2006 were being paid on average $3000 per month. Are the newer graduates paid more or less in real terms?
Eduardo, a teacher, earned $40,000 as his annual salary from his employer in 2018.
But in 2019 he decided to quit that job and start his own business: manufacturing
skateboards. Here's what he did to accomplish it:
Stopped renting out his grandparents' cottage (for $8,000 a year) and used it
as his factory instead.
.He spent $60,000 on materials and utility bills.
He got that money from his savings account, which was earning 5%
annual interest.
• He leased machines for $10,000 a year and paid $15,000 in wages.
He sold $135,000 worth of skateboards.
Eduardo's accounting profit is
but his economic profit is
O160,000; 85,000
141,000; 160,000
O-1000; 50,000
50,000; -1000
do fast.
Chapter 32 Solutions
Principles of Economics (12th Edition)
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