The Chain Weighted rate of inflation is A 1228 B 8906 C 11338 D 1338 E 1283

The chain weighted rate of inflation is a 1228 b 8906

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23.The ‘Chain Weighted’ rate of inflation is ___%.
A) 12.28B) 89.06C) 113.38D) 13.38E) 12.83Feedback: square root(113.38+112.28)-100 = 12.83%Table for Individual Question FeedbackPoints Earned:3.0/3.0Correct Answer(s):E24.Use the table below to answer questions 24 - 27NominalInterestRatePriceindex(CPI)ExpectedInflationJune 1,20082.42217.4635.1June 1,2009214.791Notes:-June 2009 is the last month of the Great recession - the official recovery, began in July of 2009 -expected inflation data is one year hence, so expected inflation for the period from June 1, 2008 to June 1, 2009 is given in June 2008. So the data in the table indicates that in June of 2008, inflation was expected to be 5.1% over the next 12 monthsUse the provided CPI data to calculate the actual inflation rate that occurred between June 2008 and June 2009 (hint: just calculate the % change in the CPI).
Table for Individual Question FeedbackPoints Earned:3.0/3.0Correct Answer(s):C25.The ex-ante real rate of interest between June 2008 and June 2009 is:Table for Individual Question FeedbackPoints Earned:3.0/3.0Correct Answer(s):B26.The ex-post real rate of interest between June 2008 and June 2009 is:Table for Individual Question FeedbackPoints Earned:3.0/3.0Correct Answer(s):D27.We know that most decisions are in part, based on expectations of the future. Suppose we have two people who are trying to decide whether to consume today (assume it is currently June 2008)or save for the future and consume one year later, in June 2009. One person, let's call him Joe, is basing his decision on the ex-ante real rate of interest like most of us do. The other person who has a crystal ball, we'll call her Crystal, can see exactly what the actual rate of inflation is going
to be and thus, has perfect foresight and bases her decision on the ex-post real rate. Look at the difference in the ex-ante and ex-post real rates you calculated in #25 and #26 above. Who wouldbe more likely to save and who would be more likely to spend?A) Crystal saves, Joe spends.B) Crystal spends, Joe saves.C) both Joe and Crystal are savers.D) both Joe and Crystal are spenders.Feedback:FEEDBACK: CRYSTAL, WHO ‘SEES’ THE DEFLATION COMING, WILL DEFINITELY BE THE SAVER SINCE HER REAL PURCHASING POWER INCREASES BY 3.65 IF SHE WAITS UNTIL JUNE 2009 TO CONSUME. JOE, WHO DOES NOT HAVE A CRYSTAL BALL, BASES HIS DECSION ON THE EX-ANTE INTEREST RATE AND GIVEN A NEGATVIVE 2.68%, WILL CONSUME TODAY SINCE HIS REAL PURCHASING POWER IS EXPECTED TO FALL IF HE WAITS UNTIL JUNE 2009 TO CONSUME. Note that, CRYSTAL’S BEHAVIOR IS CONSISTENT WITH THE EVILS OF DEFLATION (as discussed in lecture) SINCE SHE IS DEFRERRING PURCHASES UNTIL THE FUTURE – IF EVERYONE ‘EXPECTED’ DEFLATION (OR HAD A CRYSTAL BALL AND SAW IT COMING) THEN WE WOULD BE IN TROUBLE SINCE CONSUMPTION TODAY WOULD ‘DRY UP.’Table for Individual Question FeedbackPoints Earned:3.0/3.0Correct Answer(s):A

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