Calculate price index numbers

Reference no: EM13756685

8. Julia's publisher sends her a $15,000 check every year that her book is in print. Suppose Julia's book is in print for five years and the inflation rate during that period is (-2) percent.

A. What has happened to her nominal income from the book? Explain in 1-2 sentences, demonstrating you understand the term "nominal income." (4 points)
B. What has happened to Julia's real income from the book? Explain in 2-4 sentences, demonstrating you understand the term "real income." Note: there's not enough information to calculate precise changes; just discuss in terms of directions. (6 points).
C. In 4-5 sentences, explain what the term "deflation" means and why it is considered to be problematic. Support your answer with paraphrased evidence from the text AND assigned articles. (15 points)

9. (A) Calculate price index numbers for the following table, assuming year 3 is the base year, and put your results in the last column. (5 points)
(B) What does the price index tell us? Answer in 1-3 sentences. (5 points)
Year
Market Basket Outlay
Price Index
1
$170

2
180

3
200

4
200

5
224

Reference no: EM13756685

Questions Cloud

Competent people-appropriate methods-tools and techniques : There are four (4) critical success factors that are important for effective risk management: supportive organization; competent people; appropriate methods, tools and techniques; and simple, scalable process. Determine three (3) obstacles for an org..

How would you resolve the dilemma : Suppose your company is offered a large contract to do business in a country where women are not culturally accepted as management officers. The dilemma is that the person in your company who is best able to run the business in the foreign market is ..

Inverse realtionships between demand and price : The demand for airline travel is quite sensitive to price. Typically, there is an inverse realtionships between demand and price; when price decreases, demand increases and vice versa. One major airline has found that when the price (P) for a round t..

Vaginal delivery without complications : An HMO requests your hospital services for its obstetrics division. It offers to pay your hospital $2,000 for a vaginal delivery without complications (DRG 373). You look at the Standard Test Procedure (STP) for this Diagnosis-Related Group (DRG) and..

Calculate price index numbers : 8. Julia's publisher sends her a $15,000 check every year that her book is in print. Suppose Julia's book is in print for five years and the inflation rate during that period is (-2) percent.

How do business people and academic view peter drucker : How do business people and academic view peter drucker. What lesons did peter offered to modern managers. What did drucker think about capitalism in his later years? What were contributions to modern management?

Create a basic strategic management plan : You have held conversations with Precision Part's leaders and obtained the following information, which you want to use in the development of a 4-year strategic management plan. PPQ Parts employees now number 5,000, and all are currently employed in ..

How do routing protocols work : Using the course materials, the textbook, and Web resources, research linked-state routing protocols. How do routing protocols work

Product design philosophy behind industrial design : Explain the differences between the product design philosophy behind industrial design and design for manufacture/assembly. Which one do you think is more important in a customer-focused product development? What factors may need to be traded off by ..

User Account

All Pages