Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Textbook Question
Chapter 22, Problem 37P
Rosalie the Retiree knows that when she retires in
However, if the inflation rate is
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The average rate of inflation in the United States in the last 100 years is approximately 3.26%. In the last year the rate has jumped to 8.5%. Determine the present worth of a future sum of $10,000 in 10 years. Also, determine the present worth of $10,000 10 years ago. Assume time starts when inflation changes from 3.26% to 8.5%. Also assume the 8.5% rate of inflation continues infinitely.
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Chapter 22 Solutions
Principles of Economics 2e
Ch. 22 - Table 22.4 shows the fruit prices that the typing...Ch. 22 - Construct the price index for a fruit basket in...Ch. 22 - Compute the inflation rate for fruit prices from...Ch. 22 - Edna is living in a retirement home where home...Ch. 22 - How to Measure Changes in the Cost of Living...Ch. 22 - The Consumer Price Index is subject to the...Ch. 22 - Go to this website...Ch. 22 - If inflation rises unexpectedly by 5, would a...Ch. 22 - How should an increase in inflation affect the...Ch. 22 - A fixed-rate mortgage has the same interest rate...
Ch. 22 - How do economists use a basket of goods and...Ch. 22 - Why do economists use index numbers to measure the...Ch. 22 - What is the difference between the price level and...Ch. 22 - Why does substitution bias arise if we calculate...Ch. 22 - Why does the quality/new goods bias arise if we...Ch. 22 - What has been a typical range of inflation in the...Ch. 22 - Over the last century, during what periods was the...Ch. 22 - What is deflation?Ch. 22 - Identity several parties likely to he helped and...Ch. 22 - What is indexing?Ch. 22 - Name several forms of indexing in the private and...Ch. 22 - Inflation rates, like most statistics, are...Ch. 22 - Given the federal budget deficit in recent years,...Ch. 22 - Why is the GDP deflator not an accurate measure of...Ch. 22 - Imagine that the government statisticians who...Ch. 22 - Describe a situation, either a government policy...Ch. 22 - Describe a situation, either a government policy...Ch. 22 - Why do you mink the U.S. experience with inflation...Ch. 22 - If, over time, wages and salaries on average rise...Ch. 22 - Who in an economy is the big winner from...Ch. 22 - If a government gains from unexpected inflation...Ch. 22 - Do you think perfect indexing is possible? Why or...Ch. 22 - The index number representing the price level...Ch. 22 - The total price of purchasing a basket of goods in...Ch. 22 - With in 1 or 2 percentage points, what has the...Ch. 22 - If inflation rises unexpectedly by 5, indicate for...Ch. 22 - Rosalie the Retiree knows that when she retires in...
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Similar questions
- Over the next year, the inflation rate will be 6%, while the nominal interest rate is 2% per year. What is the real value of $1,000 received one year from now? (That is, what amount of money now gives you the same purchasing power as $1000 in one year.) Round to two decimal places and do not enter the $ sign. If your answer is $1.333, enter 1.33. If your answer is $1.666, enter 1.67. If appropriate, remember to enter the - sign.arrow_forwardQUESTION 9 If total inflation over 18 years is 17.3%, what is the annual inflation rate? Write the answer in percent terms with up to two decimals (e.g., 10.22 for 10.22%, or 2.33 for 2.33%).arrow_forwardInflation The consumer price index (CPI) of a certain country is given by I(t) = -0.02t³ + 0.4+² + 126 (0 ≤ t ≤ 4) of 2013. Find the annual percentage rate of inflation in the CPI of the country at the beginning of 2015. (Round your answer to three decimal places.) where t = 0 corresponds to the beginning %/yeararrow_forward
- The following table shows the annual inflation rates in several Latin American countries in October 2015 (unless otherwise noted). Assume that the rates shown continue indefinitely. Country Argentina Brazil Bolivia Nicaragua Venezuela Mexico Uruguay Currency Peso Real Boliviano Gold cordoba Bolivar Peso Peso Inflation Rate(%) 14.3 9.9 4.3 3.0 68.5 2.5 9.2 If an item in Brazil now costs 300 reals, what do you expect it to cost 7 years from now? (Round your answer to the nearest real.) realsarrow_forwardThe cost of a NYC studio apartment was $1,200 in the year 2000. By 2022 the same apartment would rent for $2,000. Can we conclude from this data that rent has increased in NYC by 66.7% ? Yes, the inflation rate is 66.7% No, we cannot meaningfully compare nominal values through different points in time. Yes, the apartment is obviously more expensive No, we have not accounted for impovements in the quality of the apartmentarrow_forwardThe consumer price index (CPI) of a country was approximately 200 at the beginning of year 2010. If inflation continued at an average rate of 2.5%, what would the index be at the beginning of year 2021?arrow_forward
- Suppose Cho is a cinephile and buys only movie tickets. Cho deposits $3,000 in a bank account that pays an annual nominal interest rate of 10%. Assume this interest rate is fixed—that is, it won't change over time. At the time of her deposit, a movie ticket is priced at $15.00. Initially, the purchasing power of Cho's $3,000 deposit is 200 movie tickets. When the rate of inflation is equal to the interest rate on Cho's deposit, the purchasing power of her deposit __________over the course of the year. Select one of the following: A. Rises B. Remains the Same C. Fallsarrow_forwardThe price of 1 gallon of organic fresh milk was $3.5 four years back from now. Today one gallon of organic fresh milk costs 6$. The average inflation rate of milk during the past 4 years is?arrow_forwardYou lend $1,012 to a friend and he agrees to pay you back next year plus he will pay you interest of 7.25%. If the inflation rate is 2.18%, then in real terms how much extra money will you have after your friend pays you back? Enter a number rounded to two decimal places with no other characters.arrow_forward
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