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AP Macroeconomics 2.4: Price Indices and Inflation

Calculate CPI and inflation, distinguish nominal from real variables, and explain how price-level changes affect real wages and living standards.

Syllabus
Effective Fall 2025
Course
AP Macroeconomics

MEA-1.F—a. Define the consumer price index (CPI), inflation, deflation, disinflation, the inflation rate, and real variables. b. Explain… question 1

[Maximum number: 2]

The table provided shows economic data for the country of Louland. The base year is year 1, and the GDP deflator in year 2 is 115.

Table for Question MEA-1.F—a. Define the consumer price index (CPI), inflation, deflation, disinflation, the inflation rate, and real variables. b. Explain… question 1 — AP Macroeconomics

Question (a)

(a)

What was the numerical value of the inflation rate from year 1 to year 2 ?

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Question (b)

(b)

If nominal wages increased by 10\% from year 1 to year 2, what happened to the real wages of workers in Louland during this time? Explain.

Begin your response to this question at the top of a new page in the separate Free Response booklet and fill in the appropriate circle at the top of each page to indicate the question number.

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