If the Price Index Last Year Was 100 and Today

question 112

Multiple Choice

If the price index last year was 100 and today it is 167,what is the inflation rate over this period?

• A)-67 percent
• B)-6.7 percent
• C)33 percent
• D)67 percent
• E)167 percent

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Definitions:

Reserve Requirement

The portion of depositors' balances that banks must have on hand as cash or in deposits with the central bank, used as a tool for monetary policy.

Bank Runs

A situation where a large number of a bank's depositors try to withdraw their funds simultaneously over concerns about the bank's solvency.

Reserve Banking

A banking system in which banks hold a fraction of their deposits in reserve, while lending out the remainder to generate profits.

Federal Funds Rate

The interest rate at which banks and credit unions lend reserve balances to other depository institutions overnight, on an uncollateralized basis.