Choose the two true statements from the following.
a)if the AEI increases by 30% a year and the RPI increases by 11.0% in the same year, then real earnings have gone down by 8.0%
b)a new baby’s parents are given £400 to invest for the baby, to be left untouched until she is 18 years old, in an account which has a guaranteed rate of interest of at least t4.5% annum. If no more money is put into the account, there will be at least £880 in the account at the end of a full 18 years.
c)If the CPI is 130.0 and the base year was taken as five years ago, then the annual rate of inflation must be 6%.
d) The cost of a stereo system is advertised with a reduction of 30%. The buyer will pay more if VAT is added on before the reduction in price, instead of VAT being added on after the reduction in price.
e) A price ratio of 1.2 corresponds to price increases of 12%.
f) An index-linked pension is worth exactly the same in real terms year after year.
would it be D and A??
Choose the two true statements from the following.
a)if the AEI increases by 30% a year and the RPI increases by 11.0% in the same year, then real earnings have gone down by 8.0%
b)a new baby’s parents are given £400 to invest for the baby, to be left untouched until she is 18 years old, in an account which has a guaranteed rate of interest of at least t4.5% annum. If no more money is put into the account, there will be at least £880 in the account at the end of a full 18 years.
c)If the CPI is 130.0 and the base year was taken as five years ago, then the annual rate of inflation must be 6%.
d) The cost of a stereo system is advertised with a reduction of 30%. The buyer will pay more if VAT is added on before the reduction in price, instead of VAT being added on after the reduction in price.
e) A price ratio of 1.2 corresponds to price increases of 12%.
f) An index-linked pension is worth exactly the same in real terms year after year.
would it be D and A??
f is true, if the "index" is the cost of living index
c is false, becasue it neglects compounding
e is false; it corresponds to a 20% rise in price
because of missing ? infrmation, (b) cannot be answered.
I don't know ahat AEI and RPI are in (a)
To determine the two true statements from the options provided, let's go through each statement and analyze them one by one:
a) If the AEI increases by 30% a year and the RPI increases by 11.0% in the same year, then real earnings have gone down by 8.0%.
This statement cannot be confirmed as true or false without knowing what AEI (Average Earnings Index) and RPI (Retail Price Index) represent. Without this information, we cannot evaluate the statement.
b) A new baby’s parents are given £400 to invest for the baby, to be left untouched until she is 18 years old, in an account which has a guaranteed rate of interest of at least 4.5% annum. If no more money is put into the account, there will be at least £880 in the account at the end of a full 18 years.
This statement cannot be confirmed as true or false because it depends on the interest rate and compounding frequency of the account. To determine the outcome, we need to know the compounding frequency and any additional rules specific to the account.
c) If the CPI is 130.0 and the base year was taken as five years ago, then the annual rate of inflation must be 6%.
This statement is false. The given information does not enable us to calculate the annual rate of inflation accurately. Inflation cannot be determined solely from the current CPI (Consumer Price Index) value and the base year. The rate of inflation requires the CPI values from both the base year and the current year.
d) The cost of a stereo system is advertised with a reduction of 30%. The buyer will pay more if VAT is added on before the reduction in price, instead of VAT being added on after the reduction in price.
This statement is true. If VAT (Value Added Tax) is added on before the reduction in price, the tax amount will also be reduced by 30%, resulting in a higher overall payment for the buyer compared to adding VAT after the reduction.
e) A price ratio of 1.2 corresponds to price increases of 12%.
This statement is false. A price ratio of 1.2 corresponds to a 20% increase in price, not 12%. The calculation to determine the percentage increase is (Price Ratio - 1) * 100%.
f) An index-linked pension is worth exactly the same in real terms year after year.
This statement is true if the "index" mentioned refers to the cost of living index. An index-linked pension is designed to maintain its value relative to the changing cost of living, ensuring that it remains constant in real terms.
Based on this analysis, the two true statements from the options provided are:
- Statement d) The cost of a stereo system is advertised with a reduction of 30%. The buyer will pay more if VAT is added on before the reduction in price, instead of VAT being added on after the reduction in price.
- Statement f) An index-linked pension is worth exactly the same in real terms year after year.