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Chapter 7: Q12 - Problems (page 142)
The real interest rate is 4 percent, and the nominal interest is 6 percent. What is the anticipated rate of inflation.
Inflation
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Consider Table 7-1. Suppose that the 2019 price of corn was to rise to 8.50\( per bushel but that the price of a digital device was to fall to 300\). The quantities of the two commodities remain the same, however. How would these changes affect the value of the 2019 price index?
Discuss the types of unemployment.
Suppose that in Figure 7-2, the number of people employed was to expand by 9.2 million, and the number of people unemployed was to rise by 7.1 million. What would be the new values of the labour force and of the unemployment rate?
If each household in a nation were to track a consumer price index that averaged the prices of items consumed solely by that household, why would you anticipate that the annual rate of change of every household's average prices likely would differ?
Currently, the price index used to calculate the inflation rate is equal to 90. The general expectation throughout the economy is that next year its value will be 99. The current nominal interest rate is 12 per cent. What is the real interest rate?
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