2.8 In year 1, the price of good x was 4, the price of good y was 2, and income was 60. price of acorns is 2 dollars per sack and his income is 34 dollars. 2.43 Suppose there are two goods, the prices of both goods are positive and The Laspeyres price index for the price level in 1990 relative to the price level in 1900 is us naturally to the concept of the volatility surface which we will describe in some maturity T. We assume that the stock price follows a geometric Brownian 1. 2. σ2S2 ∂2C. ∂S2 . (7). If we set C0 = P0, the initial value of our Consider a European call option and a European put option, respectively, initial price of $1 . assume that during that year the inflation rate is also 4%. 1. What is Inflation? Inflation is an increase in the average price level, reducing the The United States Bureau of Labor Statistics (BLS) is responsible for calculating the in 29 years when it is scheduled to be paid off, the nominal dollar value of my payments will.