Econ Questions

Explain if he following people will gain or lose during deflation.

1.A tenant who has entered into a fixed-rent contract to rent an apartment for two years.

2.A businessman who has borrowed money from a bank at a fixed interest rate.



Suppose the proportion of foodstuffs in the composite consumer price index is 25.5%.When the price of food increase by 60%.the composite CPI will increase by________


3 個解答

  • 匿名
    1 十年前

    1. In deflation. the purchasing power of money increased, while the tenant is paying the same amount of money with higher purchasing power,he/she lose.

    2. lose,same idea with Q1

    sorry i cant answer your 3rd question,coz i forget the calculation of CPI, and does CPI shows with%? i just know it will shown on numbers only.

  • 小強
    Lv 7
    1 十年前


  • R Ho
    Lv 6
    1 十年前

    CPI = Value of base year’s quantities at current yr prices/base yr prices. It is represented by an index (value) not percentage.

    Assume the previous CPI = 100. Now the only thing changed is the price of food by 60%. Thus, its impact to the CPI is an increase of 60% * 25.5%, i.e., 15.3%.

    2007-09-15 01:30:55 補充:

    Also, the new CPI would now be 115.3.