What is the most likely result when there is inflation?
A) Unemployment falls
B) People hold onto cash
C) Prices stabilize
D) A dollar goes further than it did before
Sally's current salary is $50,000. She is scheduled to receive a raise of 5% next year. If inflation is 3%, Sally's real wage next year
A) will increase
B) will remain the same
C) will decrease
D) cannot be determined
All of the following are likely to be unhappy about unanticipated inflation EXCEPT:
E) elderly people on fixed incomes
The Consumer Price Index had a value of 57 in 1986 and a value of 168 in 2010. Bill bought a yacht in 1986 for $384,300 and he sold it in 2010 for $2,300,000. What is the 1986 yacht price expressed in 2010 dollars?
A) More information is needed
[Discussion starter] True or False: An increase in the cost of living, as measured by the CPI, has a negative effect on all workers.