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Chapter 9: Q.3 (page 242)

Compute the inflation rate for fruit prices from 2001 to 2004.

Short Answer

Expert verified

28.96%, 11.23% & 6% are the inflation rate for fruit prices from 2001 to 2004.

Step by step solution

01

Step 1. Meaning

The inflation rate is an increase in the price of goods and services over time that decreases the purchasing power of money.

02

Step 2. Calculation 

The formula used for computing the inflation rate is the percentage change in the price index from year to year.

The inflation rate for fruit prices from 2001 to 2002,

= (89.90 - 69.71)/69.71

=20.19/69.71

=0.2896

=28.96%

The inflation rate for fruit prices from 2002 to 2003,

=(100-89.90)/89.90

=10.1/89.90

=0.1123

=11.23%

The inflation rate for fruit prices from 2003 to 2004.

=(100-106)/100

=-6/100

=0.06

=6%

28.96%, 11.23% & 6% are the inflation rate for fruit prices from 2001 to 2004.

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Most popular questions from this chapter

Edna is living in a retirement home where most of her needs are taken care of, but she has some discretionary spending. Based on the basket of goods in Table 9.5, by what percentage does Edna鈥檚 cost of living increase between

time 1 and time 2?

Why do economists use index numbers to measure

the price level rather than the dollar value of goods?

What has been a typical range of inflation in the

U.S. economy in the last decade or so?

If, over time, wages and salaries on the average rise at least as fast as inflation, why do people worry about how inflation affects incomes?

If inflation rises unexpectedly by 5%, indicate for each of the following whether the economic actor is helped, hurt, or unaffected:

a. A union member with a COLA wage contract

b. Someone with a large stash of cash in a safe deposit box.

c. A bank lending money at a fixed rate of interest.

d. A person who is not due to receive a pay raise for another 11months.
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