Question

1) If the Consumer Price Index (CPI) was 110 in year 1 and 130 in year 2, what was the rate of inflation? Round to nearest answer.

A) 13%

B) 15%

C) 18%

D) 20%

2) If GDP was $19T in 2019, and turns out to be$17T in 2020, what will the rate of growth be in the economy?

A) 11.8%

B) 10.5%

C) -10.5%

D) -11.8%

3) If the quantity supplied of a product is less than the quantity demanded, then:

A) A shortage of the product

B) There is a surplus of the product

C) The product is a normal good

D) The product is an inferior good

Answer 1

1. The rate of inflation is the percentage change in the Consumer Price Index. Therefore,

Therefore, the correct answer is 'Option C'.

2. GDP in 2019 = $19T

GDP in 2020 = $17T

Therefore, the correct answer is 'Option C'.

3. Since the quantity supplied is less than the quantity demanded of the product, there is excess demand in the economy because there is shortage of the product as its supply is not able to fulfill the demand of everyone. Therefore, the correct answer is 'Option A'.