Casel: In the country of Shem, the CPI is calculated using a market basket consisting of 15 apples, 5 loaves of bread, 3 robes and 20 gallons of gasoline. The per-unit prices of these goods have been as follows: Year Apples $1.00 Bread Robes Gasoline 2002 $2.00 $10.00 $1.00 2003 $1.00 $2.00 $1.50 $9.00 $1.50 2004 $2.00 $11.00 $2.00 2005 $3.00 $3.00 $15.00 $2.50

The nominal interest rate is 3% in the economy. Shawn is deciding to give loan to his friend at this rate.  The prevailing inflation rate is 2.5% Should Shawn give loan to his friend or not?

What is the cost for having inflation indexation as a product feature

www.m WO The country of Swedway monitors price changes on several hundred goods in 4 categories: food, housing, transportation and household goods, in accordance with the following CPI table: Calculate the contribution to inflation for each category and determine the overall inflation rate in Swedway. CATEGORY WEIGHT (%) PRICE CHANGE (%) CONTRIBUTION TO INFLATION RATE Food 40 10 Housing 30 15 Transportation 20 20 Household Goods 10 25 Total 100