ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Question 20
Deflation occurs only when
the average
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some prices fall, but average prices still rise.
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the average price level (
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all prices for all goods fall
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- When calculating price indices like the GDP deflator and the CPI, we multiply the ratio by 100. Why? Neither statement is true. Statement a: We multiply by 100 to put things into percentage terms. Statement b: We multiply by 100 to normalize the base year to 100. Both statements are true.arrow_forward7) In 2010, a bottle of Coke cost $1. In 2020, it would cost $1.50. The CPI for 2020 was 260 and the CPI for 2010 was 220. Which of the following statements is correct? A) The real price of Coke stayed the same. B) The real price of Coke decreased. C) The real price of Coke increased. D) The nominal price of Coke stayed the same.arrow_forwardThe consumer price index (CPI), is based on a typical market basket of goods?Explain how?arrow_forward
- Suppose the Consumer Price Index in 2016 is 127.1 with 2002 as the base year a) What is the purchasing power of the dollar compared to 2002 b) What is the real income relative to 2002 of person whose income was $72500arrow_forwardSuppose the price level reflects the number of dollars needed to buy a basket of goods containing one energy drink, one egg sandwich, and one bike rental. In year one, the basket costs $12.00. In year two, the price of the same basket is $13.00. From year one to year two, there is at an annual rate of In year one, $24.00 will buy baskets, and in year two, $24.00 will buy baskets. This example illustrates that, as the price level rises, the value of money,arrow_forwardIs the equilibrium at full employment, inflation or recession? Price level Aggregate Demand Aggregate Potential GDP Supply 50 $700 $100 100 $600 $200 150 $450 $450 200 $300 $480 250 $220 $500 300 $150 $510 $510 350 $100 $512arrow_forward
- Which of the following would occur in an economy experiencing deflation?arrow_forward34arrow_forwardSuppose the price level reflects the number of dollars needed to buy a basket of goods containing one cup of coffee, one donut, and one newspaper. In year one, the basket costs $6.00. In year two, the price of the same basket is $7.00. From year one to year two, there is at an annual rate of . In year one, $12.00 will buy baskets, and in year two, $12.00 will buy baskets. This example illustrates that, as the price level rises, the value of money .arrow_forward
- Nominal Wage rates are: wages and salaries plus the value of benefits the number of people paid hourly wages wage rates adjusted for inflation wage rates minus taxes and other deductions the rate of payment to workers in current dollarsarrow_forwardQuestion 40 Deflation a) is the same as disinflation; it means the rate of inflation has fallen. b) will make you better off if your nominal wages fall more slowly than prices. c) automatically implies that, on average, everyone is better off because prices have fallen. d) will make you better off if your nominal wages fall more rapidly than prices. e) will make you better off if your real wages fall more rapidly than prices.arrow_forwardQ18 MCQ The unemployment rate may underestimate the true extent of unemployment if: many part-time employees would like to work fulltime, but are unable to get the additional work. employees increase the number of hours they work overtime. there are a large number of people working in the underground economy. people are pretending to look for work so that they can continue receiving unemployment benefits.arrow_forward
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