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- 1) Whether you gain or lose during a period of inflation depends on: a) how the price increases affect government purchases of goods. b) whether the economy is expanding or contracting. c) whether you save or not. d) whether your income rises faster or slower than prices of the things you buy. 2) A real wage that does not keep pace with inflation implies: a) a decrease in purchasing power. b) a decrease in nominal wages. c) a decrease in nominal wages after inflation. d) an increase in the inflation adjusted real wage.how important is the inflation for the common people in the community? explain.Gina loans George $1,000. George agrees to pay her $1,100 next year. They both expect an inflation rate of 4 percent. At the end of the year, the inflation rate turns out to be 5 percent. This unexpected change is Select one: a. good for Gina but bad for George. b. bad for both Gina and George. c. irrelevant, a deal is a deal. d. good for both George and Gina. e. good for George but bad for Gina.
- Jim holds $50,000 in money at the beginning of the year. The annual inflation rate is 2 percent, and the price level rises from 1.0 to 1.02. What is the "inflation tax" that Jim pays at the end of the year? Jim pays an inflation tax of $Suppose Julie's salary went from $45,000 to 13. $175,000 in 12 years. a. Assuming she got the same percentage raise each of those twelve years, show how to calculate that rate (r%). b. Assuming that inflation was about 3% per year for those twelve years, by what percent did Julie's "purchasing power" increase? Explain what you think "purchasing power" means.Which of these is not a negative effect of inflation? a. It lowers down the value of money b. It rises the level of employment c. It increases the price of goods and services d. It lowers down the purchasing power of people
- If inflation is increasing and you expect it to continue to the future then you will want to Spend your money slower and sooner Spend your money slower and later O Spend your money faster and later Spend your money faster and soonerReal Income Joshua Vermier of Sacramento, California, received a raise after his first year on the job to $44,200 from his initial salary of $40,000. What was Joshua's raise stated as a percentage? Inflation averaged 2.4 percent for the year. Round your answer to one decimal place. What was his real income after the raise? Round your answer to nearest cent. What was his real raise stated as a percentage? Round your answer to one decimal place. %. The rate of inflation as of Thursday is 6 %, this is expected to continue. Sylvia wants to earn a real rate of return of 10% on her money. The bank is offering her 14% for deposits. a. should Sylvia accept this rate? Why or why not? b. If Sylvia expects this inflation rate to decrease to 3%, would your answer in "a" change?
- Which of the following is not an economic effect of inflation? a. None O b. Difficulty in doing long term contracts c. Savings increases consumption decreases O d. Income distribution in favour of borrower e. Decrease in purchasing power of income.4. If a gallon of gas cost $1.20 in 1997 and $2.20 in 2006, did it match, exceed, or was it less than the rate of inflation? Explain.If inflation is 4 percent per year and you receive a 3 percent raise in income, then your:
