Exam 24: Inflation and Money

Consider the following basket of goods: 50 hamburgers, 10 textbooks, eight T-shirts, and 100 bottles of water. Suppose that in 2015, each hamburger was $3.50, each textbook was $89.99, each T-shirt was $14, and each bottle of water was $1.50. In 2016, each hamburger was $3.60, each textbook was $95, each T-shirt was $13, and each bottle of water was $1.65. What was the approximate inflation rate in 2016?

The U.S. inflation rate has been _____ in the 2000s than it was in the 1970s.

The table shows consumer price index data for the United States. Use these data to answer the following questions. U.S. CONSUMER PRICE INDEX YEAR CONSUMER PRICE INDEX 1979 72.58 1980 82.38 1981 90.93 1982 96.53 1983 99.58 1984 103.93 ​ (a) What was the inflation rate in 1981? (b) What was the inflation rate in 1982? (c) Out of the years shown in the table, which year had the highest rate of inflation?

The consumer price index in 1979 was 72.6. In 1980, it was 82.4. What was the rate of inflation from 1979 to 1980?

What are some strategies that you can use to make good decisions when inflation is present?

How does money illusion cause nominal wage rigidity?

The CPI changes from 100 to 125. This means that:

What is Botswana's real GDP if its nominal GDP is $18.6 billion (in current US$) and the GDP deflator is 196.7?

Consider the following basket of goods: 50 bottles of milk, 100 avocadoes, 50 apples, and eight pineapples. Suppose that last year, each bottle of milk was $2.50, each avocado was $1.50, each apple was $0.75, and each pineapple was $4. This year, each bottle of milk is $2.50, each avocado is $1.80, each apple is $0.80, and each pineapple is $4.30. What is the inflation rate between last year and this year?

A savvy investor seeks:

Inflation is a:

You open an investment account that earns a nominal interest rate of 4.2% a year. The current consumer price index is 108. In one year, the consumer price index is expected to go to 106. What is your expected real rate of return?

Suppose that the real interest rate is 2.1%, and the nominal interest rate is 5.4%. The inflation rate is _____.

(Table: The Consumer Price Index (CPI)) What was the rate of inflation from 2009 to 2010? Table: The Consumer Price Index (CPI) February 2009 212.2 February 2010 216.7 February 2011 221.6 February 2012 224.6

The table shows consumer price index data for the United States. In which year was the inflation rate the highest? U.S. CONSUMER PRICE INDEX YEAR CONSUMER PRICE INDEX 2005 195.27 2006 201.56 2007 207.34 2008 215.25 2009 214.57 2010 218.08

You open a savings account that earns a nominal interest rate of 1.3% interest a year. The current consumer price index is 117. In one year, the consumer price index is expected to go to 120. What is your expected real rate of return?

Which of the following is an example of hyperinflation?

The table shows consumer price index data for the United Kingdom. Based on this information, what is the rate of inflation in 2018? UK CONSUMER PRICE INDEX YEAR CPI 2013 98.2 2014 99.6 2015 100 2016 101 2017 103.6 2018 106

The Producer Price Index is an index that tracks the:

Using your knowledge of price indexes, answer the following questions. (a) In a base year, what will the value of a price index always be? (b) If producers face rising costs of production, which price index will rise first? (c) Which price index captures changes in the largest variety of goods and services?