[1. Compute for the value of the peso for the current year compared to the base year 2000 by using the following data: Base Year Current Year Items Prices Indices Prices Indices Pork P150.00 P165.00 Rice 20.00 23.00 Fish 100.00 115.00 Sugar 28.00 30.00 Aggregate Price Index III. A. Give examples of people who benefit from the effects of inflation. B. Give examples of people who suffer from the effects of inflation.III. Solve for the following CPI. Base Year Current Year Items Prices Indices Prices Indices Beef (kilo) P150.00 P160.00 110.00 120.00 Milk (can) 21.50 22.50 11111 Rice (kilo) Bangus (kilo) 125.00 130.00 82.50 Cooking oil (pint) 30.50 Aggregate Value of the PExercise 1 1. Match Column A with Column B. Write the letter of the best answer on the blanks. A B 1. Prices rise because of expenses a. Inflation demand for goods 2. A continuous increase in price b. Hyperinflation 3. A loser in times of inflation c. Consumer price index 4. It traces the increase in prices to money supply d. "Monetarist" 5. Prices shoot up sharply at excess- e. Cost push inflation ively high rates f. Phillips' curve 6. They gain when the prices of the goods they sell increases g. Demand pull inflation 7. A sustained decrease in prices h. Retail price index 8. Modern version of the quantity Theory of Money i. Devaluation 9. Increase in prices due to higher j. Quantity Theory of input prices Money 10. A gainer because the money he borrows increases in value k. Index number 11. Peso is worth less than a dollar 1. Open market operation 12. Monetary policy occupies a central place in overall economic manage- m. Wholesale price index ment n. Base year 13. Trade off between unemployment rate and inflation rate o. Stock price index 14. Measures change in retail prices p. Weighted price index 15. Measures price changes during turn q. Deflation over 16. MV = PQ r. Creditor 17. Reflects changes in living standards s. Debtor 18. Oil price shook 19. Statistical measure of changes in a t. Speculator variable to change in another u. Milton Friedman 20. A normal or typical year without extraordinary changes 163 Scanned with Cam INTRODUCTORY MACROECONOMIC 64 II. Determine if the following are gainers or losers during inflation. 1. Government employees 2. Veterans 3. Lender 4. Borrower 5. Real estate owners 6. Speculator 7. Store owners 8. Middlemen 9. Pensioners 10. Public school teachersExercise 2 Determine if the following will cause a demand pull or a cost push inflation. 1. excess appending 2. higher demand 3. election expenditures 4. high military expenditures 5. higher wages by labor unions 6. monopoly power 7. devaluation 8. higher input prices 9. high excess appending 10. higher import prices Exercise 3 I. Put a check ( ) on the conditions that are present during inflation and cross on those that are not. 1. High purchasing power of money 2. High amount of money in circulation 3. Increased demand for goods 4. Fixed income earners suffer decrease in value of wages 5. Low cost of raw materials 6. More goods can be included in the market basket of a family 7. Increased price level 8. CPI is higher than 100% compared to base year Scanned with CamScar EXERCISES 165 9. Real wages of workers go down 10. Debtors gain by paying loans in lower-valued money 11. Savings are encouraged among depositors. 12. There is brisk buying in the market. 13. The velocity of money is high. 14. Creditors are encouraged to lend money. 15. Investors invest their money in productive capital goods. II. Indicate which of the following are useful tools to combat inflation by answering Yes or No before each number 1. Increase productivity of workers. 2. Implementation of government price support programs. 3. Increase production of goods and services. 4. Increase availability of loans. 5. Decrease government spending. 6. Increase taxes on luxury goods. 7. Lengthen maturity periods on loans. B. Decrease collateral requirements for borrower. 9. Raise the loan ceilings of banks. 10. Adopt a government surplus budget. 11. Adopt a tight money policy. 12. Encourage consumption spending. 13. Encourage investment. 14. ' Lesson money in circulation. 15. Removal of bottlenecks in the economic structure