Question
Hello can someone please help me answer the following questions and thank you so much!! 1)What is the Consumer Price Index (CPI), and how is
Hello can someone please help me answer the following questions and thank you so much!!
1)What is the Consumer Price Index (CPI), and how is it determined each month? What effect does inflation have on the purchasing power of a dollar? How does it explain differences between nominal and real interest rates? How does deflation differ from inflation?
2)Distinguish between demand-pull inflation and cost-push inflation. Which of the two types is more likely to be associated with a negative GDP gap? Which is more likely to be associated with a positive GDP gap, in which actual GDP exceeds potential GDP?
Problem:
1)Assume the following data for a country: total population, 500; population under 16 years of age or institutionalized, 120; not in labor force, 150; unemployed, 23; part-time workers looking for full-time jobs, 10. What is the size of the labor force? What is the official unemployment rate?
2) If the CPI was 110 last year and is 121 this year, what is this year's rate of inflation? In contrast, suppose that the CPI was 110 last year and is 108 this year. What is this year's rate of inflation? What term do economists use to describe this second outcome?
3)If the inflation premium is 2 percent and the nominal interest rate is 1 percent, what is the real interest rate? What is the real interest rate if the inflation premium is 3 percent while the nominal interest rate is 0.5 percent?
"DO NOT forget to use graph if needed"
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