Which of the following refers to the decrease in the general price level of goods and services in an economy over a period of time? A. Inflation B. Deflation C. Stagflation D. Hyperinflation
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- A) Inflation is the steady and widespread increase in prices. The inflation rate, measured by CPI, rose .1% in May (since April) and rose a total of 4% year-over-year (May 2022 to May 2023). Read the BLS report on the Consumer Price Index and identify an “item” or “all items” and begin to consider why the price increased. Do a news search or using (clear, logical, rational) reasoningexplain whether prices are increasing because demand increased or because supply decreased. Graph and explain your answerThe classical dichotomy is the separation of real and nominal variables. The following questions test your understanding of this distinction. Simone spends all of her money on comic books and beignets. In 2015, she earned $14.00 per hour, the price of a comic book was $7.00, and the price of a beignet was $2.00. Which of the following give the nominal value of a variable? Check all that apply. n The price of a beignet is $2.00 in 2015. n Simone's wage is $14.00 per hour in 2015. n Simone's wage is 2 comic books per hour in 2015. Which of the following give the real value of a variable? Check all that apply. The price of a comic book is 3.5 beignets in 2015. n Simone's wage is 7 beignets per hour in 2015. n Simone's wage is $14.00 per hour in 2015. Suppose that the Fed sharply increases the money supply between 2015 and 2020. In 2020, Simone's wage has risen to $28.00 per hour. The price of a comic book is $14.00 and the price of a beignet is $4.00. In 2020, the relative price of a…A decrease in real GDP at the same time that nominal GDP increases would be consistent with: None of the other optionsAn increase in the price levelA period of deflationA decrease in the GDP deflator
- During contractionary face of business cycle which of the following most likely occurs? Which of the following pairs of terms is used to describe fluctuation in the economy?The classical dichotomy is the separation of real and nominal variables. The following questions test your understanding of this distinction. Lucia spends all of her money on comic books and beignets. In 2012, she earned $15.00 per hour, the price of a comic book was $5.00, and the price of a beignet was $3.00. Which of the following give the nominal value of a variable? Check all that apply. a. Lucia's wage is 3 comic books per hour in 2012. b. Lucia's wage is $15.00 per hour in 2012. c. The price of a beignet is 0.6 comic books in 2012. Which of the following give the real value of a variable? Check all that apply. a. Lucia's wage is $15.00 per hour in 2012. b. Lucia's wage is 5 beignets per hour in 2012. c. The price of a comic book is $5.00 in 2012. Suppose that the Fed sharply increases the money supply between 2012 and 2017. In 2017, Lucia's wage has risen to $30.00 per hour. The price of a comic book is $10.00 and the price of a beignet is $6.00.…Which of the following is an example of a nominal variable? A.) Output B.) Employment C.) Prices D.) Physical capital
- The nominal GDP for 2021 is $125 billion, and the real GDP for 2021 is $100 billion. (1). Calculate the GDP Deflator in 2021? Show your calculation. (2). Also assume that the GDP deflator in 2020 was 100. What is the inflation rate over the 1-year period? Show yourcalculation.What is deflation? Examine three (3) effects of deflation on an economy.Which of the following statements is true?a. Deflation is an increase in the general level ofprices.b. The consumer price index (CPI) measureschanges in the average prices of consumergoods and services.c. Disinflation is an increase in the rate ofinflation.d. Real income is the actual number of dollarsreceived over a period of time.
- The classical dichotomy is the separation of real and nominal variables. The following questions test your understanding of this distinction. Eleanor spends all of her money on comic books and donuts. In 2012, she earned $15.00 per hour, the price of a comic book was $5.00, and the price of a donut was $3.00. Which of the following give the nominal value of a variable? Check all that apply. Eleanor's wage is $15.00 per hour in 2012. Eleanor's wage is 3 comic books per hour in 2012. O The price of a donut is $3.00 in 2012. Which of the following give the real value of a variable? Check all that apply. 9 Eleanor's wage is 5 donuts per hour in 2012. Eleanor's wage is $15.00 per hour in 2012. A The price of a comic book is 1.67 donuts in 2012. Suppose that the Fed sharply increases the money supply between 2012 and 2017. In 2017, Eleanor's wage has risen to $30.00 per hour. The price of a comic book is $10.00 and the price of a donut is $6.00. In 2017, the relative price of a comic book is…Sakshi's expenditure on "education and communication" as a percentage of her total expendure is much higher than the weightage given to "education and communication" in the basket prepared by the government for CPI calculation. If the inflation in the "education and communication" category much higher than overall inflation, then, for Sakshi, A. CPI overstates inflation B. CPI understates inflation C. It cannot be concluded whether CPI overstates or understates inflation D. Education and communication are not important.The GDP takes inflation into account and uses adjusted market prices. frictional O real adjusted O cyclical O re-evaluated