Asked by Ricky Moore on Jul 26, 2024
Verified
Mitch makes payments on a car loan. If the price level a year ago was 120 and people expected it to rise to 125 but it actually rose to 128, what happened to the real value of Mitch's payment as opposed to what he was expecting to happen? Express your answer to the nearest 100th.
Price Level
The average of current prices across the entire spectrum of goods and services produced in the economy, indicative of inflation or deflation.
Real Value
The value of an item or currency adjusted for inflation, showing its true purchasing power over time.
- Assess the impact of inflation on genuine income and interest rates.
Verified Answer
JB
Jaquaisha BroadhurstJul 31, 2024
Final Answer :
He was expecting it to fall by 4.17%, but it actually fell by 6.67%.
Learning Objectives
- Assess the impact of inflation on genuine income and interest rates.