3. Consider the relative PPP. If Foreign country's inflation rate is 5% and E changes by 2%, how much in % is Home's inflation rate?

An unanticipated increase in inflation can a.   reduce the real interest rate earned by lenders.   b. make creditors better off. c. make debtors worse off. d.   make workers who signed contracts at the beginning of the year better off.   e. lead to a higher purchasing power for the currency.

(3) Find the trend of a country using the provided CPI based inflation rates Year Inflation rate (%) a Stagflation b Disinflation C Deflation d 2017 2 Creeping inflation 2016 5 2015 6 2014 7 2013 9

Suppose your nominal income in dubai economic rose by 6.4 percent and the price level rose by 4.2 percent in some year Required: a. Calculate the percentage of real income (approximately) in dubai b. Assume that the nominal income rose by 4.1 percent and your real income rose by 2.7 percent in some year, Calculate the approximate rate of inflation

Now you see what the BLS economist do, except with a more complex basket of goods. Now try to construct an index and determine the inflation rate on your own. The table shows the prices of fruit purchased by the typical college student from 2001 to 2004. What is the amount spent each year on the “basket” of fruit with the quantities shown in column 2? (5 points) Items Qty. 2001 2002 2003 2004     Price Amount Spent Price Amount Spent Price Amount Spent Price Amount Spent Apples 10 $0.50   $0.75   $0.85   $0.88   Bananas 12 $0.20   $0.25   $0.25   $0.29   Grapes 2 $0.65   $0.70   $0.90   $0.95   Raspberries 1 $2.00   1.9   2.05   2.13 $2.13 Total                               Construct the price index for a “fruit basket” in each year using 2003 as the base year. (5 points)                   Compute the inflation rate…

Refer to Table 3. Assume that this economy produces only two goods Good X and GoodY. If year 1 is the base year, the value for this economy’s inflation rate between year 1 andyear 2 isA) -6.1%.B) -5.5%.C) 6.5%.D) 79%.