What is inflation and how is it measured using the Consumer Price Index?
What will be an ideal response?
The inflation rate is the percentage change in the price level from one year to the next. In other words, it is the growth rate of the price level. The CPI is a measure of the price level and so can be used to calculate the inflation rate.
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Oscar makes purchases of an existing product (X) such that the marginal utility of the last unit he consumes is 10 utils and the price is $5. He also tries a new product (Y) and the marginal utility of the last unit he consumes is 8 utils and the price is $1. The equal marginal principle suggests that Oscar should
A. increase his consumption of product Y and decrease his consumption of product X. B. increase his consumption of product X and increase his consumption of product Y. C. decrease his consumption of product Y and decrease his consumption of product X. D. increase his consumption of product X and decrease his consumption of product Y.
Rather than accept delivery, most traders in futures markets choose
A) to make margin payments. B) settlement by offset. C) to mark-to-market. D) to make arbitrage payments.
_____ taxation, either through exemptions, deductions, or credits, that are designed to further some goal of social policy
a. Indexation is a increase in b. Tax expenditures are a reduction in c. Bracket creep is an increase in d. The broadening of the tax base is an increase in
Assume Joe invests a total of $10,000 in a company - $5,000 of which is his own money and $5,000 which he borrowed at a 10% interest rate. If the company's stock value increases by 20% in one year at which time Joe sells his shares of the stock, what is Joe's rate of return on his investment?
a. 10% b. 15% c. 20% d. 30%