Find a country that has experienced more than two years of reported negative inflation in the last 10 years, can you suggest why this might have happened?
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Find a country that has experienced more than two years of reported negative inflation in the last 10 years, can you suggest why this might have happened?
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- Hyperinflation is indicated by all of the following, except: a. The general population prefers to keep its wealthy in nonmonetary assets. b. Interest rates, wages and prices are linked to a price index. c. The cumulative inflation rate over three years is approaching or exceeds 100%. d. All of the choices indicate hyperinflation.Inflation is a general increase in prices and may be measured by the Consumer Price Index (CPI). Use Appendix A to answer the questions. a. In Year 1 the CPI was 100; 30 years later, it was 239. What was the annual rate of inflation? Round your answer to the nearest whole number. %1. Which of the following regarding inflation is true? (a) If CPI changes from 100 to 105 in a year and then changes from 105 to 100 in the following year, then the initial rate of price increase is greater than the following rate of price decrease. (b) If CPI doubles in one year and then remains at that high level for five years, it means that the country suffers high inflation for five years. (c) If CPI is cut by half in one year, it means that the deflation rate of that year is 0.5%. ( d) Increasing CPI means that money is getting more and more valuable. (e) None of the above.
- What current rate environment is the US currently in by historical standards? (LOW, HIGH, AVERAGE) What are the expectations for rates in the US over the next year? How will this impact businesses borrowing money (debt)? What do you observe in day-to-day life regarding current inflation?Ih the year 2008, the United States was just entering a major recession. You are researching how various consumer prices changed in the ten-year period starting in 2008 and ending in 2018. Suppose you have located the following chart listing various consumer purchases and their costs in 2008 and 2018, as well as the percentage change based on the 2008 prices. Unfortunately, portions of the chart are missing. Fill in the blank spaces to complete the chart for your story. Round percent answers to the nearest tenth of a percent. Round dollar amount answers to the nearest whole dollar. Consumer Purchase 2008 Percent Change 2018 Single-Family Home median resale price (for a particular month) $237,300 $290,700 % A particular compact car MSRP for the manual transmission $20,300 $4 13.2% Pair of Jeans easy fit, stonewashed $44.40 $59.95 A particular fast food hamburger Average price at company-owned restaurants $2.97 $3.93 %24Suppose we have the following Treasury bill returns and inflation rates over an eight- year period: Year Treasury Bills Inflation 9.57% 12345678 7.96% 8.76 6.59 5.74 6.17 8.41 11.38 13.02 13.22 7.71 5.48 7.47 9.84 14.14 13.56 c. What is the average real return for Treasury bills over this period? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Average real return
- (b) Assume AUD = 0.58 GBP and inflation is 3.5% pa in Australia and 7% pa in Great Britain. Estimate the AUD/GBP spot rate in one year's time and comment on the accuracy of this estimate.In the year 2008, the United States was just entering a major recession. You are researching how various consumer prices changed in the ten-year period starting in 2008 and ending in 2018. Suppose you have located the following chart listing various consumer purchases and their costs in 2008 and 2018, as well as the percentage change based on the 2008 prices. Unfortunately, portions of the chart are missing. Fill in the blank spaces to complete the chart for your story. Round percent answers to the nearest tenth of a percent. Round dollar amount answers to the nearest whole dollar. Consumer Purchase Single-Family Home median resale price (for a particular month) A particular compact car MSRP for the manual transmission Pair of Jeans easy fit, stonewashed A particular fast food hamburger Average price at company-owned restaurants 2008 $237,300 $20,300 $44.60 $2.97 $ 2018 $290,600 $59.95 $3.92 Percent Change 13.2% % % %Negative inflation (deflation), nominal interest rates, and real rates. The Republic of Northern Lights, a small, stable country in the North Atlantic, is experiencing a negative inflation rate (deflation) at this time. The annual inflation rate is - 2%. If the nominal rate of interest is 6.5%, what are the real interest rates that the Northern Lightians are getting as a reward for waiting? Use the approximate nominal interest rate equation and the true nominal interest rate equation to determine the rates. Using the approximate nominal interest rate equation, what is the real interest rate that the Northern Lightians are getting as a reward for waiting? % (Round to two decimal places.)
- Consider the following information: State of Economy Recession Boom Probability of State Rate of Return if of Economy State Occurs Expected return .20 .80 Calculate the expected return. Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. -.13 .19 %How does it change from year 1 to year 2? Answer: Real spending is 10 year-1 dollar in year 1, and 20 year-1 dollar in year 2. d. Defining the implicit price deflator as nominal spending divided by real spending, compute the deflator for each year. How does the deflator change from year 1 to year 2? Answer: The implicit price deflator is 1 in year 1, and 0.5 in year 2. Inflation is -50%. E. Suppose that Abby is equally happy eating red or green apples. How much has the true cost of living increased for Abby? Compare this answer to your answers to parts (a) and (d). What does this example tell you about Laspeyres and Paasche price indexes?Which of the following statements is FALSE? The plot of the relationship between the investment risk and the interest rate is called the yield curve. Each of the last seven recessions in the United States was preceded by a period with an inverted yield curve. The nominal interest rate does not represent the increase in purchasing power that will result from investing. A risk-free cash flow received in two years should be discounted at the two-year interest rate.