Gce Model Questions Vol1 2019 Economics Question 40

Practice objective / multiple choice question 40 from the 2019 Gce Model Questions Vol1 Economics examination.

Gce Model Questions Vol1 2019 Economics Objective / Multiple Choice Medium Difficulty
Question 40 GCE_MODEL_QUESTIONS_VOL1 • 2019 • ECONOMICS • objective

The Consumer Price Index (CPI) was 120 in year 1 and 132 in year 2. During the same period a savings account offered a nominal interest rate of 8 % per annum, and a worker's nominal wage rose from \(\£15{,}000\) to \(\£16{,}200\). Compute (a) the inflation rate between the two years, (b) the real interest rate on the savings account, and (c) the percentage change in the worker's real wage (i.e., purchasing power).

Answer Options

A. (a) 10 %; (b) about -1.0 %; (c) real wage fell by approximately 1.0 %.
Correct Answer B. (a) 10 %; (b) about -1.82 %; (c) real wage fell by approximately 1.8 %.
C. (a) 12 %; (b) about -0.5 %; (c) real wage rose by approximately 0.5 %.
D. (a) 8 %; (b) about -2.5 %; (c) real wage fell by approximately 2.5 %.
Correct Answer
B
Correct Option:
(a) 10 %; (b) about -1.82 %; (c) real wage fell by approximately 1.8 %.

About This Question

This is Gce Model Questions Vol1 2019 Economics Question 40. It is one of the objective questions from the 2019 Gce Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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