Question

19) If the Consumer Price Index chenges from 120 in year ene to 150 in yeae twe, the rae of inflation in the intervening yenr

28) Suppone that the nominal national tn e in oe c ry n d by 10 during the year, when infation wae S penont Theone the eal CD

its mcq and short question answer.

19) the Con e Pre nde chang f inflation in the intervenng year in A) 10 pent 12.5 pert 920 percent D) 25 penomt 30 penomt 1 S

14) I 27 milon people ane employed nd 3 i p e a dwht e unemploymemt ate A) 11% ) 10% C)90% D) so% E) indeterminable from the

25) Suppose that the nomnal natonal ecome in contry inc by 0 duning the year, when inftation was 5 pencent Therefone the eal

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Answer #1

1) Solution: 25%

Explanation: The inflation rate between Year 1 and Year 2 is the percentage change in the price indices during these two years

(150 - 120) / 120 * 100 = 30/120 * 100 = 25%

 

2) Solution: overstate

Explanation: Due to substitution bias, new product bias and quality bias CPI tends overstate the inflation

 

3) Solution: rose by 5 percent

Explanation: Real National Income = Nominal national income - Inflation = 10% - 5 % = 5%

 

4) Solution: changing the government spending and/or tax to change national income

Explanation: In the fiscal policy the government adjusts its tax rates and spending levels to influence a country's economy.

 

5) Solution: Expansionary

Explanation: Expansionary fiscal policy is increased tax benefits or government spending

As per policy we have to answer first four questions

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