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# Inflation

### Predictions of inflation, unemployment, and RGDP based on current growth rates

Go to the website: www.bls.gov at (ftp://ftp.bls.gov/pub/special.requests/cpi/cpiai.txt) and (http://stats.bls.gov/cps/cpsaat1.pdf) and www.bea.gov at http://www.bea.gov/bea/dn/gdplev.xls and collect the data on annual average data on CPI index, unemployment rates and real GDP from year 2001 through 2005. The first two url link

### Inflation impacts.

1) Inflation has been on the increase recently. Explain the impact of inflation on wage rates and employment

### Inflation

1) Inflation has been on the increase recently. Explain the impact of inflation on consumption, aggregate demand, investment and savings.

### Exchange Rate, PPP, Inflation, and Interest Rate

1. Jones is asked to recall the correct representation of purchasing power parity. St is the exchange rate at time t, expressed in units of foreign currency per domestic currency. ID and IF are the expected rates of inflation in the domestic and foreign countries, and E( ) denotes an expected value. Which of the following is th

### real rate of return

Suppose that you buy a 1-year maturity bond for \$1,000 that will pay you back \$1,000 plus a coupon payment of \$60 at teh end of the year. What real rate of return will you earn if the inflation rate is 1. 2 percent 2. 4 percent 3. 6 percent 4. 8 percent

### Causes of Inflation Influences

What are some causes for inflation? What are some of the cost and how do expectations inluence the effects of inflation.

### Inflation and Growth

Explain the different views on the relations between inflation and growth.

### Inflation

Define inflation and distinguish a real concept from a nominal concept. State two important costs of inflation.

### Excel problem

Calculate present value; interest; NPV; IRR etc. on spreadsheet --- A plan is made to start a school with a one-year training course. The plan involves running this school for 10 years. In the first four years 20, 30, 40 and 50 students are expected to enroll, while for the remaining years the number is assumed to grow by 5%

### Inflation and Present Worth Assumptions

Smooth-Top is a British Columbia manufacturer of desktops. They are considering an increase of their capacity. Consulting engineers have submitted two routes to accomplish this: (1) install a new production line that would produce wood desktops finished with hardwood veneer and (2) install a new production line that would produc

### NPV with Inflation for Clarkwood Wood Products

Clarkwood is a British Columbia wood products manufacturer. They are considering a modification to their production line that would enable an increase in their output. One of Clarkwood's concerns is that the price of wood is rising more rapidly than inflation. They expect that because of this their operating cost per unit will r

### Finance question

How much would you expect to receive for a nominal interest rate in Holland if funds can be invested in the U.S. at a rate of 7% when inflation is expected to be 4% in the U.S. and 8% in Holland? The company cost of capital for a firm with a 60/40 debt/equity split, 8% cost of debt, 15% cost of equity, and a 35% tax rate

### Question about Floating exchange rate

A country has a lower inflation rate than all other countries, It has more rapid economic growth. The central bank does not intervene in the foreign exchange market. What can you say about each of the following (and why)?: a. The exchange rate? b. The current account balance? c. The expected exchange rate? d. The interest

### U.S. GDP

U.S. GDP is expected to increase during the next 5 years. Unemployment seems to be taking a downturn as well. However inflation is expected to be higher than normal during this period as well with unemployment. As a financial analyst, how would you evaluate this forecast for your firm?

### Basic economic questions

1. Explain the difference between nominal and real variables, and give two examples of each. According to the principle of monetary neutrality, which variables are affected by changes in the quantity of money? 2. According to the quantity theory of money, what is the effect of an increase in the quantity of money? 3. It is

### Short-Run and Long-Run with Philip Curve

Provide a theoretical and graphical explanation of the Philip Curve. Distinguish between short-run and long-run and consider the role of expectations and credibility and the natural rate of unemployment.

### Rents, Profits, and the Financial Environment of business

Hello, if someone could please assist me with this question from a text, we will be having this as an essay question and I need to familiarize myself with this topic. Thank you. What are the various incentives that investors have to hold TIPS (Treasury Inflated Protection Securities)? Why does the U.S. Treasury also hav

### COST-PUSH VERSUS DEMAND-PULL INFLATION

What is the difference between cost-push and demand-pull inflation? Which was the primary cause of inflation in the early 1970's? What type of inflation has the Federal Reserve been trying to prevent in 1998 and 1999?

### Inflation & Prices

Define inflation and discuss how economists track the general level of prices.

### Money in high inflation with negative real interest rates

1. What effect would a period of rapid inflation likely have on the role of money as a store of value, and on people's attitudes toward money generally? Why? 2. in 1973-75, real interest rates were actually negative. (a) what would a negative real interest rate mean? (b) what could explain such an unusual development?

### Global economics

1. You just won the Irish Lottery! You bought a ticket while you were on vacation in Ireland, and you just won a 1 million Euro jackpot after all taxes were taken out. A. If the current exchange rate is US\$1 equals 1.25 Euros, how much did you win in US dollars? B. Suppose that the interest rate in Irish banks is 5%

### annual growth rate

In 1955, the last year when social security payments included only old-age payment (before disability) payments that year totaled \$4.9 billion. For 2001, the figure was \$433 billion (excluding Medicare, which was another \$218 billion). During that period, the CPI rose at an average annual rate of 4.2%, and the number of people

### Real output and potential output

What is the difference between real output and potential output?

### What affects monetary policy?

In a speech in January 2004, Fed chairman Alan Greenspan said, " I am increasingly of the view that, at a minimum, monetary policy in the last two decades has been operating in an environment particularly conducive to the pursuit of price stability. The principal features of this environment included (1) increases political sup

### Inflation and wage demand

On July 20, 1993 Alan Greespan, chairperson of the Board of Governors of the Federal Reserve System, testified before a congressional committee. He said: "The role of expectations in the inflation process is crucial. Even expectations not validated by economic fundamentals can themselves add appreciably to wage and price pres

### Employment, inflation, concretionary and expansionary fiscal

Why do Keynesian economists believe that market forces do not automatically adjust for unemployment and inflation? What is their solution for the stabilization of economic fluctuations? What is the difference between concretionary and expansionary fiscal policy? Which do we think is more appropriate today?

### Economics question book the economy today schiller 10/e

Section 1: Graphical Analysis: For each question (numbers 1 through 14), choose an answer from the choices (A through E) below: A) The curve shifts to the right (outward) B) The curve shifts to the left (inward) C) Movement along the curve D) The market outcome is not on the curve E) No impact For Questions 1 thr

### Rational Expectations

18. (Rational Expectations) Using an AD-AS diagram, illustrate the short-run effects on prices, output, and unemployment of an increase in the money supply that is correctly anticipated by the public. Assume that the economy is initially at potential output.

### Inflation

Suppose that in 2009 there is a sudden, anticipated burst of inflation. Consider the situations faced by the following individuals. Who gains and who loses? a. A homeowner whose wages will keep pace with inflation in 2009 but whose monthly mortgage interest payments to a savings bank will remain fixed b. An apartment land

### Inflation Index

Consider the following price indexes: 90 in 2005, 100 in 2006, 110 in 2007, 121 in 2008, and 150 in 2009, Answer the following questions. a. What is the base year? b. What is the inflation rate from 2006 and 2007? c. What is the inflation rate from 2007 and 2008? d. If the cost of a market basket in 2006 is \$2,00