The Costs of InflationIf you want to make a 11% real return on a ...

[april 19]

Question 1

Using Price Indexes to Correct for Inflation

Year	Nominal Average Hourly Earnings	CPI
1	$12​	100
2	13​	107​
3	18​	113​

Based on the data in the table, the rate of growth of the average price level from Year 2 to Year 3 is ________. (Round to the nearest tenth when appropriate.)
◦ 38.5%
◦ 5.3%
◦ 5.6%
◦ 10.6%

Question 2

The Costs of Inflation

If you want to make a 11% real return on a loan that you are planning to make and the expected inflation rate during the period of the loan is 6%, then you should charge a nominal interest rate of ________.
◦ -5%
◦ 11%
◦ 17%
◦ 5%

[Marys]

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[april 19]

Excellent

[AngeliqueG]

Thanks for the timely response, appreciate it