Assume tuition and fees at North Carolina State University cost $4,259 in 2004 and $7,787 in 2012. If the price index was 184 in 2004 and 226 in 2012, then we could say: a. tuition has increased at about the same rate as inflation. b. nominal tuition has decreased. c. tuition suffers from money illusion due to inflation. d. tuition has increased more rapidly than inflation. e. tuition has increased more slowly than inflation.

Question

Kale Tyler

Business

7 June, 14:57

Assume tuition and fees at North Carolina State University cost $4,259 in 2004 and $7,787 in 2012. If the price index was 184 in 2004 and 226 in 2012, then we could say: a. tuition has increased at about the same rate as inflation. b. nominal tuition has decreased. c. tuition suffers from money illusion due to inflation. d. tuition has increased more rapidly than inflation. e. tuition has increased more slowly than inflation.

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Keyla · Answer 1

D

Explanation:

The tuition has increased more rapidly than inflation because the tuition increased by 83% while inflation has only increased by 23%

The formula for computing the change is by taking later year figure divided by earlier figure minus 1 as illustrated below:

For price index = 226/184-1=23%

For tuition fee = 7787/4259-1=83%

For