Questions respond at least four out of the following

  • University of Delaware
  • MISY 1160
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Questions: Respond at least four out of the following nine questions Answer any three questions and post in the Assignment drop box. 1) Suppose that the value of the CPI in January of 1999 was 165 and its value on January 2000 was 172. What was the rate of inflation in 1999?
2) Suppose that your annual salary in 1997 was $50000 and rose to $62000 by the year 2000. If during that same time the CPI rose from 160 to 175, what was the % increase in your "real wage" over this three period? 3) Why do the CPI and the GDPD show different rates of inflation for the same time period?
4) Why has the tremendous growth in household consumption of computers since the CPI base year of 1983 imparted an upward bias to the rate of increase of the CPI?.
7) The nominal yield on 10 year treasury bonds is currently ~4.9%. If an investor wishes to earn at least a 3.5% real before tax rate of return on her capital, what expectations about future inflation levels must she hold in order to willingly hold 10 year treasury bonds at existing prices? 8) Agree or disagree with the following statements and explain your reasoning: A) The major problem with inflation is that it reduces everyone's real income.
9) Explain why high inflation rates are likely to lower the growth rate of RGDP over time.

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