Suppose your income rises from Rs19,000 to Rs31,000 while the CPI rises from 122 to 169 Your standard of living has likely ?
Correct answer: C. risen
- A. fallen
- B. You can't tell without knowing the base year
- C. risen
- D. stayed the same
Explanation
Income increased by about 63%, while the CPI increased by about 39%, so purchasing power and real income rose. The base year is unnecessary because only the change in the CPI matters.
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About Macroeconomics
The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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