Monday

September 22, 2014

September 22, 2014

Posted by **sarah** on Sunday, May 13, 2007 at 12:33pm.

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)

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