Question :
81) The group that tends to be most hurt by : 1384349
81) The group that tends to be most hurt by unexpected inflation is
A) banks.
B) individuals with unindexed pensions.
C) employers.
D) fixed-income earners.
E) both B and D are correct.
82) If the Consumer Price Index changes from 120 in year one to 122 in year two, the rate of inflation in the intervening year is
A) 22%.
B) 20%.
C) 2.0%.
D) 1.67%.
E) 0%.
83) If the Consumer Price Index changes from 120 in year one to 144 in year two, the rate of inflation in the intervening year is
A) 10%.
B) 12.5%.
C) 20%.
D) 25%.
E) 30%.
84) If the Consumer Price Index changes from 120 in the year 2012 to 126 in the year 2014, the average rate of inflation per year over this two-year period is approximately
A) 6%.
B) 5%.
C) 3%.
D) 2.5%.
E) 1.5%.
85) If the price index is P1 in one year and P2 in the next year, the inflation rate from one year to the next is calculated as
A) (P2 – P1) × 100
B) (P2/P1) × 100
C) (P1/P2) × 100
D) [(P2 – P1)/P1] × 100
E) [(P1 – P2)/P2] × 100
86) If the price index is P1 in year 1 and P2 in year 3, the average inflation rate per year over this period is calculated as
A) (P2 – P1) × (100/2)
B) [(P2 – P1)/P1] × 100
C) [(P2 – P1)/P1] × [100/2]
D) [(P1 – P2)/P2] × 100
E) [(P1 – P2)/P2] × [100/2]
87) Suppose that a price index for a certain basket of goods and services has a value of 150 in 2012 and a value of 156 in 2013. This index suggests that the cost of the market basket of goods and services
A) was 4% higher in 2013 than in 2012.
B) was 6% lower in 2013 than in 2012.
C) was 6% higher in 2013 than in 2012.
D) was 156% higher in 2013 than in 2012.
E) was approximately the same in 2013 and 2012.
88) Which of the following statements is logically valid?
A) If the rate of inflation is high, the nominal rate of interest must be low.
B) If the rate of inflation is less than the nominal interest rate, the real interest rate is positive.
C) If the real interest rate is less than the nominal interest rate, inflation must be zero.
D) If the real interest rate is less than the nominal interest rate, inflation must be negative.
E) If the nominal interest rate is high, the real interest rate must be high.
89) A worker currently earning $3000 per month has negotiated a 4% wage increase in anticipation of a 4% inflation rate in the next year. Under what scenario will the worker have a higher purchasing power?
A) if next year’s inflation rate is 4%
B) if next year’s inflation rate is 3%
C) if next year’s inflation rate is 5%
D) if next year some prices increase by only 4%
E) if next year some prices increase by only 5%
90) Suppose that at the end of a given year there has been unanticipated inflation of 4%. Who is better off at the end of the year?
A) a bank that lent money at the beginning of the year
B) a bank that lent money at the end of the year
C) a consumer who borrowed money at the beginning of the year
D) a consumer who borrowed money at the end of the year
E) a consumer who lent money at the end of the year
