the price index in 2016 was lower than 1090 QUESTION 21 Will\'s expenditures on

Question

the price index in 2016 was lower than 1090 QUESTION 21 Will's expenditures on food for three consecutive years, along with other values, are presented in Table 24-12. the table below Year 2010 $5,800 168.0 2011 2009 $5,000 160.0 Expenditures on Food $6,600 Consumer Price Index Refer to Table 24-12. Will's 2009 food expenditures in 2010 dollars amount to O a $5,500. Ob $4,975. O c. $3,625 Od s5,250 QUESTION 22 If the nominal interest rate is 5 percent and the rate of inflation is -2.5 percent, then the real interest rate is

Explanation / Answer

Answer
The expenditure in year x in dollar of year y=(expenditure in year x/CPI in year x)*CPI in year y
Will's 2009 food expenditure in 2010 dollars
=(5000/160)*168
=5250
Will's 2009 food expenditure in 2010 dollars $5250
option d

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