Table 1. The table below applies to an economy with only two goods -hamburgers and hot dogs. The fixed basket consists of 4 hamburgers and 8 hot dogs. Price of Price of hot Year hamburgers dogs 2020 $ 5.00 $ 3.00 2021 5.50 3.30 2022 5.61 3.63 Refer to table 1. If the base year is 2020, then the economy's inflation rate in 2021 is O 10.91 percent O 11.11 percent 0 8 percent O 10 percent

Table 1. The table below applies to an economy with only two goods -hamburgers and hot dogs. The fixed basket consists of 4 hamburgers and 8 hot dogs. Price of Price of hot Year hamburgers dogs 2020 $ 5.00 $ 3.00 2021 5.50 3.30 2022 5.61 3.63 Refer to table 1. If the base year is 2020, then the economy's inflation rate in 2021 is O 10.91 percent O 11.11 percent 0 8 percent O 10 percent

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter17: Inflation

Section: Chapter Questions

Problem 5SQ

See similar textbooks

Similar questions

Rosalie the Retiree knows that when she retires in 16 years, her company will give her a one-time payment of 20,000. However, if the inflation rate is 6 per year, how much buying power will that 20,000 have when measured in todays dollars? Hint: Start by calculating the rise in the price level over the 16 years.
The index number representing the price level changes from 110 to 115 in one year and then from 115 to 120 the next year. Since the index number increases by five each year, is five inflation rate each year? Is the inflation rate the same each year? Explain your answer.
The total price of purchasing a basket of goods in the United Kingdom over four years is: year 1=940, year 2=970, year 3=1000, and year 4=1070. Calculate two price indices, one using year 1 as the base year (set equal to 100) and the other using year 4 as the base year (set equal to 100). Then, calculate the inflation rate based on the first price index. If you had used the other price index, would you get a different inflation rate? If you are unsure, do the calculation and find out.
Compute the inflation rate for fruit prices from 2001 to 2004.
A fixed-rate mortgage has the same interest rate over the life of the loan, whether the mortgage is for 15 or 30 years. By contrast, an adjustable-rate mortgage changes with market interest rates over the life of the mortgage. If inflation falls unexpectedly by 3, what would likely happen to a homeowner with an adjustable-rate mortgage?
With in 1 or 2 percentage points, what has the U.S. inflation rate been during the last 20 years? Draw a graph to show the data.
Construct the price index for a fruit basket in each year using 2003 as the base year.