.111 AT&T; 50% 0, + 9:54 PM ccsu.blackboard.com QUESTION 14 2 points Save Answer

Question

.111 AT&T; 50% 0, + 9:54 PM ccsu.blackboard.com QUESTION 14 2 points Save Answer Suppose in Economy X, the value of a the CP basket of goods in 2010 was $500 and in 2011 it was $525. Using 2010 as the base year, the CPI for 2011 is and the rate of inflation was QUESTION 15 2 points Save Answer Economy X is in a recessionary gap and wants to increase output (GDP) by $90 million. If the marginal propensity to consume is 0.90, the government would have to change government spending by S million in order to reach its goal. However if it decided to change taxes instead, it would have to change the amount it collected in taxes by S million? QUESTION 16 2 points Save Answer Suppose the Fed sells $10 million on the open market. If the reserve ratio is 0.25 then the money multiplier is and the change in the money supply would be million. Click Save and Submit to save and submit. Click Save All Answers to save all answers. Save All Answers Save and Submit

Explanation / Answer

Question 14) Solution :- Consumer price index (CPI) for Year 2011 = (525 / 500) * 100.

= 1.05 * 100

= 105.

Rate of inflation = (525 - 500) / 500

= 25 / 500

= 0.05 i.e., 5 %

Conclusion :-

Question 16). Solution :- Money multiplier = 1 / Reserve ratio.

= 1 / 0.25

= 4.

Change in money supply = 10 Million * 4

= $ 40 Million.

Conclusion :-

Consumer price index (CPI) for Year 2011 105 Rate of inflation 5 %

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