ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Economists widely agree that the
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True |
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b. |
False |
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- What can be a reason why inflation is not occuring when government spending increases in an economy?arrow_forwardSuppose that in 2019 there is a sudden, unanticipated burst of inflation. Consider the situations faced by the following individuals. Who gains and who loses? Explain why?a. A homeowner whose wages will keep pace with inflation in 2019 but whose monthly mortgage payments to a savings bank will remain fixedb. An apartment landlord who has guaranteed to his tenants that their monthly rent payments during 2019 will be the same as they were during 2018c. A banker who made an auto loan that the auto buyer will repay at a fixed rate of interest during 2019d. A retired individual who earns a pension with fixed monthly payments from her past employer during 2019arrow_forwardWhen an economy approaches full employment, why does demand-pull inflation become a problem? Explain.arrow_forward
- Assume the inflation rate as measured by the CPI is 3.9% and the inflation rate as measured by the core CPI is 2.3% What would explain the difference between the two? Which would you argue that policy makers would be more likely to pay attention to and why?arrow_forwardSuppose the CPI was 110 last year and is 116 this year. Instructions: Round your answers to 1 decimal place. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. a. What is this year's inflation rate? percent b. In contrast, suppose that the CPI was 110 last year and is 105 this year. What is this year's inflation rate? percent c. What term do economists use to describe this second outcome? (Click to select) ♥arrow_forwardWhich of the following groups would most likely be harmed by inflation? Group of answer choices spenders workers retirees none of the above Older people often reminisce about the “good old days” when prices were much lower. This is misplaced nostalgia primarily because in the “good old days” Group of answer choices prices were not really that low wages were much lower also When interest rates fall, investment expenditures by businesses Group of answer choices decrease increasearrow_forward
- Calculating inflation using a simple price index Consider a fictional price index, the College Student Price Index (CSPI), based on a typical college student’s annual purchases. Suppose the following table shows the information on the market basket for the CSPI and the prices of each of the goods in 2017, 2018, and 2019. The cost of each item in the basket and the total cost of the basket are shown for 2017. Question1 In the last row of the table, calculate and enter the value of the CSPI for the remaining years. Between 2017 and 2018, the CSPI increased by_________% Between 2018 and 2019, the CSPI increased by__________% Question2 Which of the following, if true, would illustrate why price indexes such as the CSPI might overstate inflation in the cost of going to college? Check all that apply. A. Professors required each student to buy 10 textbooks, regardless of the price. B. The quality and design of calculators improved dramatically from 2017 to 2019. For…arrow_forwardConsider the following: Price Index in 2017 86 Price Index in 2018 100 Price Index in 2019 108 Price Index in 2020 120 Price Index in 2021 146 a. The base year is 2018 b. Calculate the inflation rate from 2018 to 2019. 8 % (Enter your response as a percentage rounded to two decimal places.) c. Calculate the inflation rate from 2019 to 2020. 11.11 % (Enter your response as a percentage rounded to two decimal places.) d. Assume the cost of a market basket in 2018 is $2,137.0. (Enter your responses rounded to one decimal place.) Calculate the cost of the same basket of goods and services in 2017. Calculate the cost of the same basket of goods and services in 2021.arrow_forwardPlease describe how inflation is measured using the Consumer Price Index (CPI).arrow_forward
- Give two specific reasons why inflation in Canada is higher than normal.arrow_forwardQ. Explain why economists consider inflation at too high a level to be a bad thing.arrow_forwardInflation represents the rate of increase of the average price of goods. If inflation decreases from 10% to 5%, does the average price of goods decrease? Explain.arrow_forward
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