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Unformatted text preview: [email protected] http://www2.bc.edu/peter-ireland/ec132.html CPI = Cost of the Basket in the Current Year 100 Cost of the Basket in a Base Year Inflation Rate = CPI in Current Year CPI in Previous Year CPI in Previous Year 100 Number of Baskets Bought by Ruth in 1931 = $80,000 in 1931 Cost of Each Basket in 1931 2010 Cost of the Baskets Bought by Ruth in 1931 = Cost of Each Basket in 2010 Number of Baskets Bought by Ruth in 1931 $80,000 in 1931 = Cost of Each Basket in 2010 Cost of Each Basket in 1931 2010 Cost of the Baskets Bought by Ruth in 1931 Cost of Each Basket in 2010 = 100 Cost of Each Basket in a Base Year Cost of Each Basket in a Base Year 1 $80,000 in 1931 Cost of Each Basket in 1931 100 2010 Cost of the Baskets Bought by Ruth in 1931 = CPI in 2010 $80,000 in 1931 CPI in 1931 Value in this Year's Dollars = Value in a Past Year's Dollars CPI This Year CPI in the Past Year Value of Ruth' s Salary in 2010 Dollars = $80,000 in 1931 Dollars Value of Hoover' s Salary in 2010 Dollars = $75,000 in 1931 Dollars 218 = $1,147,368 15.2 218 = $1,075,658 15.2 Real Interest Rate = Nominal Interest Rate Inflation Rate...
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This note was uploaded on 02/29/2012 for the course ECON 132 taught by Professor Rado during the Fall '08 term at BC.

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