Here are values of the CPI (multiplied by 100) for each year from 1990 to 2000.

a)For each year beginning with 1991, calculate the rate of inflation from the previous year.(15 points)

Round your answers to 1 decimal place.

Year

CPI

Inflation Rate (%)

1990

130.7

1991

136.2

1992

140.3

1993

144.5

1994

148.2

1995

152.4

1996

156.9

1997

160.5

1998

163

1999

166.5

2000

172.2

b)What happened to inflation rates over the 1990s? Compared to 1990-1991, the inflation rates remained ...................throughout the 1990`s.

Select the right answer:

a)the same

b)higher

c)lower

Explain and justify your answer. (15 points)

Question Three (40 points)

How would each of the following likely affect the real wage and employment of unskilled workers on an automobile plant assembly line? (select the right answer, then explain and justify your answer).

1.Demand for the type of car made by the plant increases.

a.Real wage and employment decrease

b.Real wage and employment increase

c.Real wage increase and employment decrease

d.Real wage decrease and employment increase

2.A sharp increase in the price of gasoline causes many commuters to switch to public transportation.

a.Real wage and employment decrease

b.Real wage and employment increase

c.Real wage increase and employment decrease

d.Real wage decrease and employment increase

3.Because of alternative opportunities, people become less willing to do factory work.

a.Real wage and employment decrease

b.Real wage and employment increase

c.Real wage increase and employment decrease

d.Real wage decrease and employment increase

4.The plant management introduces new assembly-line methods that increase the number of cars unskilled workers can produce per hour while reducing defects.

a.Real wage and employment decrease

b.Real wage and employment increase

c.Real wage increase and employment decrease

d.Real wage decrease and employment increase

5.Robots are introduced to do most basic assembly-line tasks.

a.Real wage and employment decrease

b.Real wage and employment increase

c.Real wage increase and employment decrease

d.Real wage decrease and employment increase