Suppose the CPI Last Year Is 121 and the CPI

question 21

Multiple Choice

Suppose the CPI last year is 121 and the CPI this year is 137. The correct method to calculate the inflation rate is

• A)(137/121)× 100 = 113.2 per cent.
• B)[(137 - 121)/121] × 100 = 13.2 per cent.
• C)137 + 121 = 258.
• D)(137 - 121)/100 = 16 per cent.

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Definitions:

Marginal Social Cost

The additional cost incurred by society as a whole due to the production of one more unit of a good or service.

Damage Cost

The monetary cost associated with the harm done to goods in an economy, which can result from disasters, accidents, or intentional acts.

Negative Externality

An adverse effect suffered by a third party as a result of an economic transaction in which they had no involvement.

Internalize

The process of incorporating the cost of externalities into the decision-making process of firms or individuals.