Please answer all the questions Thank you very much Question

Please answer all the questions. Thank you very much.

Question 9 1 pts Assume the CPI was 100 in 1996 and is 122 in 2004. If a bundle of goods cost $100 in 1996, how much would that same bundle of goods cost in 2004? O $122. O $22 O $222 o $100

Solution

Ans 9)

CPI was $100 in 1996 and then it was $122 in 2004. CPI is nothing but the price of basket therefore our answer is A

Ans 10)

Fischer Parity says that =Nominal INterest Rate=Inflation rate+ Real INterest Rate

We have Inflation rate=0

Hence Nominal rate=Real rate=5%

Option D is correct response

Ans 11)

Inflation rate=CPI2009-CPI2008/CPI208=212-200/200=6%

Nominal Rate=Inflation rate+Real INterest Rate=3.6%+6%=9.6%

ANs 18)

Transportation Cost=15% if increases by 20% then 15%*0.2=18%

Increase is 3%

Hence option D is correct response

Ans 20)

Inflation =(203.2/138)^(1/15)-1=2.613%

Nominal Wage rate=(17.1/10.67)^(1/15)-1=3.194%

17.1/(1.02613)=$15.7 Option A is correct response