The delay between the time a policy is enacted and the time the policy has its effect on the economy is called

If the CPI was 122.3 at the end of last year and 124.5 at the end of this year, the inflation rate over these two years was

A) 1.8 percent. B) 2.5 percent. C) 22.5 percent. D) 18.0 percent.

Suppose a deposit in New York earns 6 percent a year and a deposit in London earns 4 percent a year. Interest rate parity holds if the

A) U.S. dollar appreciates by 2 percent a year. B) U.S. dollar depreciates by 2 percent a year. C) U.K. pound depreciates by 2 percent a year. D) None of the above answers is correct because interest rate parity requires that the interest rates be the same in both countries.