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Thursday, February 24, 2011

Short Quiz: What does inflation mean?

Prices of food and gasoline, among other essentials is going up.   But what does that really mean in dollars & cents terms?  Here's a short quiz to see if you can guess how much more you'll be paying for basic items once prices increase.  No calculators- try to do it in your head

Answers will be below pictures of celebrities born today, 2/24:

1) A lb. of chicken breast costs $3.79.  The supermarket has to raise price by 6%.  You buy 1lb of chicken breast weekly. Prior to increase, you paid $197.08/yr. for chicken.  How much will you be paying now over a full year?

a- $199.25
b- $202.77
c- $208.90
d- $213.19

~ Adm. Chester Nimitz, Amer. commander of the U.S. Pacific Fleet-W.W.II.

Answer:   c- $208.90;  6% incr. on 1lb = $4.02/lb; Yearly increase of $11.82

2) A gallon of milk costs $3.55. The supermarket has to raise the price by 5%.  You buy 1 gallon every week. Prior to the price increase, you paid $184.60/yr for milk.  How much will you be paying now over a full year?

a- $187.99
b- $193.83
c- $196.50
d- $200.10

~ Edward James Olmos - "Miami Vice"

Answer:  b- $193.83;  5% incr. on 1 gallon= $3.73  Yearly increase of  $9.23

3)  You have basic cable which comes to $47/mo. including taxes. That comes to $564/yr.  The cable company needs to raise its rates by 5%--  How much will you be paying for a full year of cable?

a- $577
b- $592
c- $602
d- $613

~ Billy Zane - "Titanic"

Answer:   b- $592; 5% incr. on 1mth cable = $49.35;  Yearly increase of $28

4)  You fill your vehicle with gas once a week- 16 gallons.  Normally you paid $3.05/gal which meant over a full year ($3.05/gal x 16gal. x 52 weeks), you would have paid $2537 for gasoline.   Now gas has risen to $3.30/gal.  With same weekly fill-up, what will you be paying now over a full year?

a- $ 2590
b- $ 2611
c- $ 2635
d- $ 2745

~ Abe Vigoda - "Barney Miller"

Answer:  d- $2745; ($3.30/gal x 16 gal x 52 fill-ups) Yearly increase of $208

5)  Your electric bill on average comes to $300/month which for a full year adds to $3600.  The electric company will be raising its rates by 5.5%.  With no alterations to your energy usage, how much will you now be paying over a full year?

a- $3650
b- $3724
c- $3798
d- $3822

~ Barry Bostwick - "Rocky Horror Picture Show"

Answer:  c- $3798;  monthly: $300 x 5.5% = $316.50;  Yearly increase of $198

6)  When you add up the cost in all the expenses in questions 1 through 5, your old total yearly expense would have been $7083.  Seeing the prices increase with inflation, what would your new total yearly expense be?

a- $7288
b- $7403
c- $7538
d- $7723

~ Honus Wagner, Hall of Fame Shortstop- Pittsburgh Pirates

Answer: c- $7538; you will be spending $455 more out of pocket over a year's time on nothing more than chicken breast, milk, basic cable, gasoline and electricity.

~ This is what the Federal Reserve wants- a devaluation of the dollar so exports are cheaper for corporations i.e. bigger profits, while actively pushing inflation so money has less worth domestically and prices of goods and services become more expensive.  When commodity prices like corn, wheat, soybeans, oil and electricity go up, Wall St is happy but ultimately is is All of us who lose.

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