Measuring the rate of inflation using a market basket that excludes food and energy prices is O provides a real, rather than a nominal, rate of inflation. is more consistent with measures of inflation used in other countries. O fluctuates more than measures of inflation that include food and energy prices O gives a better measure of ongoing, sustained price changes.

Measuring the rate of inflation using a market basket that excludes food and energy prices is O provides a real, rather than a nominal, rate of inflation. is more consistent with measures of inflation used in other countries. O fluctuates more than measures of inflation that include food and energy prices O gives a better measure of ongoing, sustained price changes.

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter7: Unemployment And Inflation

Section: Chapter Questions

Problem 3.7P

See similar textbooks

Similar questions

The index number representing the price level changes from 110 to 115 in one year and then from 115 to 120 the next year. Since the index number increases by five each year, is five inflation rate each year? Is the inflation rate the same each year? Explain your answer.
Inflation rates, like most statistics, are imperfect measures. Can you identify some ways that the inflation rate for fruit does not perfectly capture the rising price of fruit?
The total price of purchasing a basket of goods in the United Kingdom over four years is: year 1=940, year 2=970, year 3=1000, and year 4=1070. Calculate two price indices, one using year 1 as the base year (set equal to 100) and the other using year 4 as the base year (set equal to 100). Then, calculate the inflation rate based on the first price index. If you had used the other price index, would you get a different inflation rate? If you are unsure, do the calculation and find out.
What has been a typical range of inflation in the U.S. economy in the last decade or so?
If inflation rises unexpectedly by 5, indicate for each of the following whether the economic actor is helped, hurt, or unaffected: A union member with a COLA wage contract Someone with a large stash of cash in a safe deposit box A bank lending money at a fixed rate of interest A person who is not due to receive a pay raise for another 11 months
Do neoclassical economists see a value in tolerating a little more inflation if it brings additional economic output? Explain your answer.
Rosalie the Retiree knows that when she retires in 16 years, her company will give her a one-time payment of 20,000. However, if the inflation rate is 6 per year, how much buying power will that 20,000 have when measured in todays dollars? Hint: Start by calculating the rise in the price level over the 16 years.