Suppose that Lisa lends Alex $1,000, which Alex must repay after one year with an interest payment of 10%. When Lisa lends money to Alex, she expects that the inflation rate over the year will be 3%. However, after she lends the money, the actual inflation rate for the year turns out to be 5%. In this scenario, who gains from the higher than expected inflation rate?

How might your personal inflation rate differ from the average inflation rate as measured by the Consumer Price Index?

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%

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?

The nominal interest rate is 10​%. The inflation rate is 2​%.   The real interest rate is equal to

Last year the jones family earned $40,000. This year their income is $42,000. If the inflation rate was 10%, did the jones family experience an increase/decrease/no change in their Normal income? Did the jones family experience an increase/decrease/no change in the real income ?

Use the information in the table to calculate the %change in prices (inflation rate), using a chain-weighted methodology. Q1=2 Q2=3 Year (t) P1 E1 P2 E2 E(t) 2017 $1.05 $2.00 2018 $1.10 $2.10 2019 $1.10 $2.15 2020 $1.15 $2.15 Price Index Inflation Rate 2017 2018 2019 2020 Question 1: What is the inflation rate for 2019? a) 1.76% b) 1.16% c) -0.60% d) -3.02

Calculate the inflation rate when Nominal Interest rate is 7% and real interest rate is 2.5%

Suppose a person works hard at a job after graduation and after her first year, her effort is rewarded with a 3% raise when the average wage increase in her company is 2%. Later, the government releases its inflation report and says that the inflation rate is 7%.   Given this information, which of the following is true regarding her standard of living?   Her standard of living has improved because the 3% raise is enough to offset the average rise in prices.   Her standard of living did not improve because the purchasing power of her income is less than it was last year.   Her standard of living has remained the same because the rate of inflation does not influence purchasing power.   Her standard of living has increased by the amount of inflation, namely, 7%.

Calculate what will be the nominal interest rate at any given loan if the inflation is 3.2% and the real interest rate is 0.8 %