# Online Quiz #3 Answers - Quiz#3 Answers 1 D The CPI index...

This preview shows pages 1–2. Sign up to view the full content.

Quiz #3 Answers 1. D  - The CPI index in the base year is just 100. The CPI is unit-less! 2. D  - CPI for 2006 = {[\$14*100+ \$6*100]/[\$11*100 + \$5*100]}*100= [\$20/\$16]*100 = 125 3. C  - Since the economy experiences positive inflation, it implies that the CPI increases  every year. Therefore if the CPI for 2000 is 98 and for 2005 is 110, it must be 100 (at the  base year) sometime in between those two years. 4. B  - Real income = [nominal income/CPI]*100 or CPI = [nominal income/real income]*100.  Therefore CPI = [45,000/22,000]*100 = 204.5 5. A  - The percentage increase in nominal income is = [3,000/50,000]*100 = 6%. Using the  approximation method, the percentage increase in real income is = percentage increase  in nominal income? Inflation rate = 6% -2.6% = 3.4%. 6.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### Page1 / 2

Online Quiz #3 Answers - Quiz#3 Answers 1 D The CPI index...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online