Exercises
Business Cycle, Unemployment and Inflation
Business Cycle, Unemployment and Inflation
What is the advantage of using CPI instead of GDP deflator to calculate the inflation rate of an economy?
Skills required: distinguish and compare between similar concepts
What is the difference between inflation and disinflation?
Skills required: distinguish and compare between similar concepts
The unemployment rate in an economy is 6% and it has 300,000 people employed. Calculate the number of unemployed population.
Skills required: remember important formula and apply it to the question with advanced math techniques
It is typical for individuals to borrow housing mortgage loan from a bank to afford an apartment. Assume the bank offer the loan at a fixed interest rate, explain, whether the individual would gain or lose in times of unexpected inflation.
Skills required: understand the background information and analyze the situation combined with economic concepts
The Hong Kong government announced the issuance of additional inflation-linked bonds (iBonds) in 2022-23 financial year. Suppose iBonds pays an interest rate of 2% and the investors expect the inflation rate will be 1.4% next year. Will the investors gain or lose? By what percent?
Skills required: understand the background information and analyze the situation combined with economic concepts and math techniques
If the nominal interest rate on a one-year bond is 10% and the expected inflation rate is 2%, the nominal rate of return and the expected cost of holding cash are __________ and __________ respectively.
Skills required: distinguish and understand similar concepts, remember important formula and apply it to the question
If the nominal interest rate on a one-year bond is 6% and the expected inflation rate is 3%, the nominal rate of return and the expected cost of holding cash are __________ and __________ respectively.
Skills required: distinguish and understand similar concepts, remember important formula and apply it to the question
The nominal interest rate of a one-year bond and the expected inflation rate are 8% and 3% respectively. If the actual inflation rate is 6%, then the actual real interest rate is __________ and the actual rate of return of holding cash is __________.
Skills required: distinguish and understand similar concepts, remember important formula and apply it to the question
Related concepts:
The nominal interest rate of a one-year bond and the expected inflation rate are 6% and 4.5% respectively. If the actual inflation rate is 3%, then the actual real interest rate is __________ and the actual rate of return of holding cash is __________.
Skills required: distinguish and understand similar concepts, remember important formula and apply it to the question
Related concepts:
If the nominal interest rate is 5% and the expected inflation rate is 3%, the cost of holding money is __________, the nominal return of holding money is __________ and the expected real interest rate is __________.
Skills required: distinguish and understand similar concepts, remember important formula and apply it to the question
If the nominal interest rate is 10% and the expected inflation rate is -2%, the cost of holding money is __________, the nominal return of holding money is __________ and the expected real interest rate is __________.
Skills required: distinguish and understand similar concepts, remember important formula and apply it to the question