A retiree wants level consumption in real terms over a 30-year retirement. If the inflation rate equals the interest rate she ea
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Answer:
Step-by-step explanation:
The information given in the question can be represent in a table format for better understanding with the additional columns as follows:
Items Weights Q₀ Prices P₀ Prices P₁ P₀Q₀ P₁Q₀
Cashew 1 $12.50 $17.00 $12.50 $17.00
Pecans 1 $4.00 $4.00 $4.00 $4.00
Almonds 1 $5.50 $3.00 $5.50 $3.00
Total $22 $24
Can you say what happened to the overall "price level"?
The changes in overall price level can be a result of a condition termed as inflation rate
How might you construct a measure of the "change in price level"?
To construct a measure of the change in price level; we need to determine the consumer price index (CPI).
The consumer price index can be determined by using the relation:
= 109.0%
consumer price index (CPI) is 109.0% ; This implies that there is a 9.9% inflation in the economy.