Butsic Inflation 1997 Question

Chris Heim ( (no email) )
Mon, 26 Apr 1999 13:24:15 -0500

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It seems to me that the question (#24) posed on the 1997 exam concerning
Butsic's inflation paper is internally flawed. From the information given,
it is easy to determine that
P = 40 and
Pd = 34.34 (using 8%)
u is given as .04. This must equal (W-P)/W to give W = 41.66
thus V = W - Pd = 7.32, but v does not equal the 20% given in the question.
Instead it equals 0.1757 = 7.32/41.66.

Did I miss something?

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It=20seems to me that the question (#24) posed on the 1997 exam concerning =Butsic's=20inflation paper is internally flawed.  From the information given, =it is=20easy to determine that
P =3D 40=20and
Pd =3D=2034.34 (using 8%)
u is=20given as .04.  This must equal (W-P)/W to give W =3D=2041.66
thus V=20=3D W - Pd =3D 7.32, but v does not equal the 20% given in the =question. =20Instead it equals 0.1757 =3D 7.32/41.66.
 
Did I=20miss something?
 
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