On April 1, the price of gas at Bob\'s Corner Station was $3.70 per gallon. On M

Question

On April 1, the price of gas at Bob's Corner Station was $3.70 per gallon. On May 1, the price was $4.20 per gallon. On June 1, t was back down to $3.70 per gallon. Between April 1 and Mah, Bob's price increased by-, or Between May 1 and June 1, Bob's price decreased byor Suppose that at a gas station and the prices across the street is across the street, prices are always 20% higher than Bob's. In absolute dollar terms, the difference between Bob's prices when gas costs $4.20 than when gas costs $3.70 economists blame high commodity prices (including the price of gas) on interest rates being too low Suppose the Fed raises the target for the federal funds rate from 2% to 2.5%. This change of its target by approximately percentage points means that the Fed raised Grade It Now Save & Continue Continue without saving Copyright Notices Terms of Use Privacy NoticeSec

Explanation / Answer

Between April 1 and May 1, Bob’s price increased by:- $4.20 -$3.70 = $0.5

Or (0.5)/3.7 =13.51%

Between May 1 and June 1, Bob’s price decreased by:- $4.20 -$3.70 = $0.5

Or (0.5)/4.2 =11.9%

2.5%- 2% = 0.5% ,this change of 0.5 percentage points means that fed has raised its target by approximately 0.5/2 =25%

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