Suppose the value of the CPI is 1.100 in year one, 1.210 in year two, and 1.331 in year three. Assume also that the price of computers increases by 3% between year one and year two, and by another 3% between year two and year three. The price level is increasing, the inflation rate is ________, and the relative price of computers is ________.
A. increasing; increasing
B. constant; decreasing
C. increasing; decreasing
D. constant; increasing
Answer: B
You might also like to view...
The stock of wealth increases more rapidly the faster the flow of ________.
A. saving B. money C. income D. assets
According to the interest rate effect, an increase in the price level, if other factors are held constant, will lead to
A) a reduction in total real spending on interest-rate-sensitive goods. B) an increase in the stock of real wealth held by the public. C) an outward shift of the aggregate demand curve. D) an increase in the real interest rate.
What makes the demand curve of the perfectly competitive firm uniquely different from that of firms in other kinds of market structures?
The U.S. dollar exchange rate is determined by the:
a. World Bank. b. Federal Reserve. c. Forces of supply and demand. d. International Monetary Fund. e. U.S. government.