If inflation is 8% and the price of oil has increased by only 5%, then the relative price of oil: A) B) Has decreased by 5% Has increased by 5% C) Has increased by 3% D) Has decreased by 3%
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- Suppose that the price of good 1 increases. The amount of additional income a consumer requires to reach the same utility as before the price increased is called the inflation rate consumer surplus O compensating variation O equivalent variationSupposethat on January 1 2009, the TL price of thedollar is 1.40 overtheyear, inflation rate in Turkey is 25 % and U.S. inflation rate is 10%. Iftheexchange rate is $1= 1.50 TL at theend of theyear, whichcurrencyappearto be overvalued.?Explain your answer.c) The government has released the latest retail price index which suggests inflation was1.62%. A typical basket of food at the supermarket this week costs £52.67. Calculate thecost of that typical basket:i) a year agoii) one month ago (assuming inflation occurs evenly throughout the year)
- If VIF- variance inflation factor is 1.25 what does it suggest when price is a function of income Is multicollinearity an issue here?Interest RatesSuppose that you make a loan of $1,500 to your friend at a rate of 10% interest because you expect the inflation rate to be 5%.a) By how much does your purchasing power increase once the loan is completely paid off?b) Assuming that after the loan was repaid, you discovered that inflation rate over the life of the loan was only 2%. Who gained?Officially consumer price inflation occurs when there is Inflation is measured by calculating A) one-time increase in the general price level measured using GDP Deflator; a price level. B) a one-time increase in wages; a price index. C) an increase in the price level measured using CPI; the percentage change in a price index from one year to the next. D) a sustained increase in wages and GDP Deflator; the percentage difference between the price level and a price index.
- A period of time against which costs of the market basket in other periods will be compared in computing a price index is called O the inflation period. O the market basket. O the adjustment period. O the base periodThe Consumer Price Index (CPI) exhibits four known biases. Three of these biases occur, because the CPI is calculated based on a basket of goods year-to-year. This calculation to compare CPI values year-to-year and calculate the inflation rate. approach makes it Ofixed; more difficult O variable; more difficult O fixed; easier O variable; easier. Deflation is- (A) A situation of falling prices o (B) A situation of rising prices o (C) A situation of constant prices (D) None of these
- The average annual cost(tuition, fees, and room and board) at four-year private universities rose from $6,070in 1980 to $29,257 in 2004. Calculate the percentage rise in cost from 1980 to2004, and compare it to the overall rate of inflation as measured by the Consumer Price Index. The Consumer Price Index for 1980 is82.6and the Consumer Price index for 2004 is 188.9.The percentage rise in cost from 1980 to 2004 is %??(Round to the nearest tenth as needed.)Suppose you have $200,000 in a bank term account. You earn 5% interest perannum from this account.You anticipate that the inflation rate will be 4% during the year. However, theactual inflation rate for the year is 6%.Calculate the impact of inflation on the bank term deposit you have andexamine the effects of inflation in your city of residence with attention to foodand accommodation expenses.2. The Australian Bureau of Statistics (ABS) reported in May 2017 that the civilianpopulation in Australia over 15 years of age was 20.8 million.Of this population of 20.8 million Australians, 13.5 million were employed and0.7 million were unemployed.Calculate Australia’s labor force and the number of people in the civilianpopulation who were not in the labor force? Also,Suppose Dalia is a sports fan and buys only football tickets. Dalia deposits $3,000 into a savings account that pays an annual nominal interest rate of 5%. Assume this interest rate is fixed, and so it will not change over time. On the day she makes her deposit, suppose that a football ticket has a price of $15.00. Initially, Dalia's $3,000 deposit has a purchasing power of football tickets. For each of the annual inflation rates given in the following table, first determine the new price of a football ticket, assuming it rises at the rate of inflation. Then enter the corresponding purchasing power of Dalia's deposit after one year in the first row of the table for each inflation rate. Finally, enter the value for the real interest rate at each of the given inflation rates. Hint: Round your answers in the first row down to the nearest football ticket. For example, if you find that the deposit will cover 20.7 football tickets, you would round the purchasing power down to 20 football…