47. Refer to Exhibit S-2. If this graph represents the aggregate demand and supp

Question

47. Refer to Exhibit S-2. If this graph represents the aggregate demand and supply model, increase in the unemployment rate during a period of stagflation during the how would you illustrate how the United States economy experienced both inflation and a dramatic 1970s? A) AD shifted to the right B) AD shifted to the left C) SRAS shifted to the right D) SRAS shifted to the left Use the following to answer question 48: The table below relates to the economy of Mainland, where the typical consum basket consists of 2 iPhones and 3 hamburgers. er's market Price of a hamburger Year 2007 2008 Price of an iPhone S300 $400 $2 $6 Refer to table 11-7. If the base year is 2007, then the consumer price indices for 2007 and 2008 (rounded to the nearest whole number) are A) 302 in 2007 and 406 in 2008. B) 100 in 2007 and 74 in 2008. C) 606 in 2007 and 818 in 2008. D) 100 in 2007 and 135 in 2008. 48. Use the following to answer questions 49-50: Table: ABC Bank's Balance Sheet Liabilities (millions) $2 Checkable deposits $100 Cash in bank vault Deposits at the Federal Reserve Loans Property 13 75 Bonds

Explanation / Answer

48.

The formula for CPI is

CPI = (Cost of market basket at current year price / Cost of market basket at base year price) * 100

Cost of market basket at current year price for 2007 = (2 * $300) + (3 * $2) = $606.

Cost of market basket at base year price for 2007 = (2 * $300) + (3 * $2) = $606.

So, CPI for 2007 = ($606 / $606) * 100 = 100.

Now,

Cost of market basket at current year price for 2008 = (2 * $400) + (3 * $6) = $818.

Cost of market basket at base year price for 2007 = (2 * $300) + (3 * $2) = $606.

So, CPI for 2008 = ($818 / $606) * 100 = 134.9 or 135.

So, the correct option is

D) 100 in 2007 and 135 in 2008.

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