1. If your nominal income rises by 4 percent and your real income falls 1 percent, by how much did the price level change?

2. If actual inflation is more than expected inflation, who would benefit more, borrowers or lenders?

3. If the CPI at the end of year one was 100 and was 108 at the end of year two, what would the inflation rate be for year two?

4. Suppose that the consumer price index (CPI) was 160 in 2004 and 166 in 2005. What was inflation in 2005? (Use the growth rate formula)

5. Suppose a market basket of goods and services costs $1,000 in the base year and the CPI is currently 110. What is the price of the market basket now?

6. Suppose an economy only produces one good. In 2014, the country produced 5 million units, which it sold for $10 each. In 2015, the country produced 6 million units, which it sold for $12 each. a. What was the percentage increase in the production of the good from 2014 to 2015? b. What was the GDP for this economy in 2014? 2015?

c. What was the percentage increase in nominal GDP from 2014 to 2015?