basket is $8.00. From year one to year two, there is    at an annual rate of    .   In year one, $90.00 will buy    baskets, and in year two, $90.00 will buy    baskets.   This example illustrates that, as the price level falls, the

Assume that a market basket necessary for consumption by a typical household in the economy consists of 300 sandwiches and 3 iPads. In year 2017 the price for one sandwich was $4, and the price of one iPad was $150. In year 2018, the price for one sandwich was $5, and the price of one iPad was $200. Assume that for our analysis we consider year 2017 as the base year. What is the rate of inflation from year 2017 to year 2018? a) 127.27% b) 27.27% c) 20% d) 75%

Sally will earn $30,000 this year and $40,000 next year. The real interest rate is 20% between this year and next year; she can borrow or lend at this rate. She has no wealth at the start of this year and plans to finish next year having consumed everything she possibly can. She would like to consume the same amount this year as next year. The inflation rate is 0%. (a) How much should Sally save this year? How much will Sally consume in each of the two years? (b) How would your answers change if the real interest rate was 40% ?

If the CPI in 2011 was 136.6, determine the purchasing power of the dollar compared with the base year 2002 (CPI = 100).

Imagine that you borrow $5,000 for one year and at the end of the year you repay the $5,000 plus $600 of interest. If the inflation rate was 4%, what was the real interest rate you paid?

The 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?

The table below represents the economy of Bruce, IL, which is a small town in Moultrie County. Corn is grown and only used in the production of beef (as feed). Rifles are produced but only used by government for policing. Beef and juice are produced and consumed by all citizens. If necessary, use 2012 as your base year. Corn Rifles Beef Juice Price Quantity Price Quantity Price Quantity Price Quantity 2011 $350 1000 $150 100 $5 100 $2 210 2012 $360 700 $175 120 $6 110 $2 220 2013 $380 1100 $165 140 $6 130 $4 220 2014 $400 1200 $185 150 $6 140 $5 200 What is the nominal GDP for 2013?

Suppose, you are planning to put away $20,000 of your savings for one year. You have the following options: 1.) Buy an indexed savings bond that earns 6.50% interest rate for the next year or, 2.) Buy a non-indexed savings bond that earns 11.00% interest rate for the next year. The inflation rate for the next year is expected to be 4.50%. Which option will you choose for the next year? OA. The non-indexed bond should be chosen as it pays a higher rate of interest. OB. The rate of inflation should not play a role in making this decision. OC. It does not matter whether the indexed or the non-indexed bonds are chosen, since they pay the same real rate of interest. D. The indexed bond option should be chosen as it protects from inflation.

Name Owner File size Location 5. In December 2023, the CPI-U for all items was 306.746. Five years earlier, in December 2018, the CPI-U was 251.233. What was the percentage increase in the CPI-U during those five years?

You are a saver, and you deposit your savings in your savings account at your local bank. The bank promises a nominal interest rate on your savings of 2.10%. You expect an inflation rate of 1.25% over the next year. Based on this information, what is the real interest rate that you want to receive? 1.25% 0.85% 2.10% 3.35% -0.85%