If the growth rate of real GDP is 1%, the rate of inflation is 5%, and the grow supply is 6%, then, according to the quantity theory of money, what is the gra GDP? 11% 12% 5% 6% 7% Ⓒ4%
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- and the real money If the inflation rate is higher than the rate of growth of the nominal money supply, the nominal money supply supply (M/P) O a. Stays constant; rises O b. Stays constant; falls O c. Rises; falls O d. Rises; stays constant mo thonSuppose that a country’s inflation rate increasessharply. What happens to the inflation tax on theholders of money? Why is wealth held in savingsaccounts not subject to a change in the inflationtax? Can you think of any way in which holders ofsavings accounts are hurt by the increase in inflation?If the Consumer Price Index changes from 118 in the year 2009 to 127 in the year 2011, the average rate of inflation per year over this two-year period is approximately O A. 7.6 percent. О В. 2.4 рercent. O C. 4.7 percent. O D. 8.7 percent. ОЕ. 3.7 регcent.
- Which one of the following is NOT true about the costs of inflation to society? O Unexpected higher inflation rate hurts lenders. O Higher inflation rate increases the cost of printing menus and catalogues for businesses. Higher inflation rate creates general inconvenience to the public Unexpected higher inflation rate hurts borrowers O Higher inflation distorts individuals' tax liabilitiesAn increase of 3 percent in the inflation rate causes the natural level of output to O increase by 3 percent O increase by an amount that cannot be determined from the data given O decrease by 3 percent O decrease by an amount that cannot be determined from the data given O not changeAssume that John has a car loan with a nominal interest rate of 4%. If the actual inflation rate is 3%, then the real rate is 3% 4% O 7% O 1%
- Suppose, you are lending money to your friend Julia and you want a real rate of return of 8.00%. Furthermore, you expect the inflation rate to be 4.50%. Which of the following interest rates should you charge? O A. 6.25% O B. 12.50% O C. 8.00% O D. 3.50% Click to select your answer. lenovo V560Firms require capital to invest in productive opportunities. The best firms with the most profitable opportunities can attract capital away from inefficient firms with less profitable opportunities. Investors supply firms with capital at a cost called the interest rate. The interest rate that investors require is determined by several factors, including the availability of production opportunities, the time preference for current consumption, risk, and inflation. Suppose the Federal Reserve (the Fed) decides to tighten credit by contracting the money supply. Use the following graph by moving the black X to show what happens to the equilibrium level of borrowing and the new equilibrium interest rate. INTEREST RATE, r (Percent) 0 16 0 D S2 CAPITAL (Billions of dollars) S1 8 EquilibriumSuppose that Shonda borrows $20,000 to purchase a car. The bank charges her a nominal interest rate of 9%. If the inflation rate decreases from 4% to 3%, which of the following is true? OA decrease in inflation decreases the real interest rate and hence decreases the real cost of borrowing. OA decrease in inflation increases the real interest rate and hence decreases the real cost of borrowing. O The nominal interest rate does not change and hence the real cost of borrowing remains the same. O A decrease in inflation increases the real interest rate and hence increases the real cost of borrowing.
- The money stock grows by 15%, the real GDP grows by 2%, the velocity of circulation does not change. What will be the rate of inflation? 17.3% O 17% O 1.1739 O 12.74%According to the Quantity Theory of Money, if the velocity of money is constant, and if the money supply increases, while at the same time real GDP decreases, then, ceteris paribus, it follows that in the long run: Select one: O a. the price level will increase - i.e. the economy will experience inflation. O b. the price level will decrease - i.e. the economy will experience deflation. O c. nominal GDP must be decreasing. O d. none of the above is mathematically possible..ull T-Mobile ? * 2:21 AM @ O 5% 4 A myopenmath.com How to calculate the inflation rate for food, 1913-2021 Start with the inflation rate formula: CPI in 2021/CPI in 1913 * 1913 USD value = 2021 USD value Then plug in historical CPI values from above. The CPI for Food was 9.923 in the year 1913 and 270.938 in 2021: 270.938/9.923 * $20 = $546.08 Therefore, according to the U.S. Bureau of Labor Statistics, $20 in 1913 has the same "purchasing power" as $546.08 in 2021 (in the CPI category of food). Use the highlighted info above to answer each question below. Round appropriately to the context. a. The absolute change in the cost of food from 1913 to 2021 was | 261.01 2$ Calculation: 261.015 b. The rate of change in the cost of food from 1913 to 2021 was $/year
