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Unformatted text preview: Price of necessities Price of luxuries 2001 $10 $10 2002 10 12 2003 11 13.20 a. Using 2001 as the base, find the CPI for 2002 and 2003. b . Find the inflation rate between 2001 and 2002 and between 2002 and 2003. c . Suppose that Jane is retired and received $15,000 in Social Security benefits during 2001. How much did she receive in 2003? d . Suppose Jane actually consumed only luxuries. In real terms, was she better off in 2001 or 2003? Explain . e. In what ways does the CPI overestimate the cost of living? f . Jane borrowed $1000 in 2001 at a 10% interest rate (so that she had to repay a total of $1100 in 2002). Calculate the real interest rate on the loan....
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This note was uploaded on 04/14/2010 for the course ECON 3353 taught by Professor Prodan during the Spring '05 term at University of Alabama  Huntsville.
 Spring '05
 Prodan
 Economics, Macroeconomics

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