Question

on april 1, the price of gas at bobs corner station was $3.40 per gallon. on may 1, the price was $3.90 per gallon. on june 1, it was back down to $3.40 per gallon.
between april 1 and may 1, bobs price increased by
between may 1 and june 1, bobs price decreased by
suppose that at a gas station across the street, prices are always 20% higher than bobs. in absolute dollar terms, the difference between bobs prices and the prices across the street is when gas costs $3.90 than when gas costs $3.40.
some economists blame high commodity prices (including the price of gas) on interest rates being too low.
suppose the fed raises the target for the federal funds rate from 2% to 2.5%. this change of percentage points means that the fed raised its target by approximately

Explanation:

Step1: Calculate price increase from April 1 - May 1

Find the difference: $3.90 - 3.40=0.50$. Calculate the percentage increase: $\frac{3.90 - 3.40}{3.40}\times100=\frac{0.50}{3.40}\times 100\approx14.71\%$.

Step2: Calculate price decrease from May 1 - June 1

Find the difference: $3.90 - 3.40 = 0.50$. Calculate the percentage decrease: $\frac{3.90 - 3.40}{3.90}\times100=\frac{0.50}{3.90}\times 100\approx12.82\%$.

Step3: Calculate price difference between Bob's and across - street station

Price across street when Bob's is $3.90$: $3.90\times(1 + 0.2)=3.90\times1.2 = 4.68$. Price across street when Bob's is $3.40$: $3.40\times(1 + 0.2)=3.40\times1.2 = 4.08$. Difference: $4.68-4.08 = 0.60$.

Step4: Calculate change in federal funds rate

The change in percentage points is $2.5\%-2\% = 0.5$ percentage points. The percentage increase: $\frac{2.5 - 2}{2}\times100=\frac{0.5}{2}\times100 = 25\%$.

Answer:

Between April 1 and May 1, Bob's price increased by $0.50$, or approximately $14.71\%$.
Between May 1 and June 1, Bob's price decreased by $0.50$, or approximately $12.82\%$.
The difference between Bob's prices and the prices across the street is $0.60$ when gas costs $\$3.90$ than when gas costs $\$3.40$.
The Fed raised its target by $0.5$ percentage points, or approximately $25\%$.