Question

On April 1, the price of gas at Bob’s Corner Station was $4.95 per gallon. On May 1, the price was $5.45 per gallon. On June 1, it was back down to $4.95 per gallon.Between April 1 and May 1, Bob’s price increased by$0.50 , or by ___ %.Between May 1 and June 1, Bob’s price decreased by $ , or ____ %.Suppose that at a gas station across the street, prices are always 20% higher than Bob’s. In absolute dollar terms, the difference between Bob’s prices and the prices across the street is _____ when gas costs $5.45 than when gas costs $4.95.Some economists blame high commodity prices (including the price of gas) on interest rates being too low.Suppose the Fed raises the target for the federal funds rate from 2% to 2.75%. This change of _____ percentage points means that the Fed raised its target by approximately_____.

Answer 1

Answer: Please refer to Explanation

Explanation:

1. a. Between April 1 and May 1, Bob’s price increased by $0.50 , or by ___ %.

To calculate, divide the difference in the amounts by the amount the change occured from.

The price increased by $0.50 from $4.95. Percentage Increase should be,

= 0.5 / 4.96 * 100%

= 10.1%

b. Between May 1 and June 1, Bob’s price decreased by $ , or ____ %.

The Price by $0.5 from $5.95 to $4.95

= 0.5/5.95

= -9.17% (negative because it was a price decrease)

2. Across the street, their price is 20% higher than Bob's.

When Bob's prices are $5.45, there's are,

= 5.45 * ( 1 + 20%)

= 5.45 * 1.2

= $6.54

Difference is,

= 6.54 - 5.45

= $1.09

3. The Fed raised it's rate from 2% to 2.75%.

The change is,

= 2.75% - 2%

= 0.75%

This is a percentage Change of,

= 0.75/2 * 100%

= 37.5%

This change of 0.75 percentage points means that the Fed raised its target by approximately 37.5%.