Question 172.5 pts Table 24-1 The table below pertains to Pieway, an economy in

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Question 172.5 pts

Table 24-1

The table below pertains to Pieway, an economy in which the typical consumer’s basket consists of 10 bushels of peaches and 15 bushels of pecans.

Year

Price of
Peaches

Price of
Pecans

2005

$11 per bushel

$6 per bushel

2006

$9 per bushel

$10 per bushel

Refer to Table 24-1. If 2005 is the base year, then the CPI for 2005 was

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Question 182.5 pts

Henri earned a salary of $50,000 in 2001 and $70,000 in 2006. The consumer price index was 177 in 2001 and 265.5 in 2006. Henri's 2001 salary in 2006 dollars is

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Question 192.5 pts

If the nominal interest rate is 4 percent and the real interest rate is -2.5 percent, then the inflation rate is

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Question 202.5 pts

Last year real GDP in the imaginary nation of Populia was 907.5 billion and the population was 3.3 million. The year before real GDP was 750 billion and the population was 3 million. What was the growth rate of real GDP per person during the year?

Year

Price of
Peaches

Price of
Pecans

2005

$11 per bushel

$6 per bushel

2006

$9 per bushel

$10 per bushel

Explanation / Answer

Q17) When the base year is considered for CPI its value is 100 because real and nominal GDP are same in base year so CPI is 100. Select 100

Q18) Salary = $50,000 in 2001 and $70,000 in 2006. CPI = 177 in 2001 and 265.5 in 2006. Henri's 2001 salary in 2006 dollars is 50000*265.5/177 = 75000. Select 75000

Q19) Inflation rate = nominal rate - real rate = 4% - (-2.5%) = 6.5% Select 6.5%

Q20) Growth rate of GDP per capita = Real GDP per capita this year - Real GDP per capita previous year = 907.5/3.3 - 750/3 = (275 - 250)*100/250 = 10% Select 10%

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