PLEASE HELP me with this intro to ECONOMICS question? IM STUCK!

Question

On April 1, the price of gas at Bob’s Corner Station was $3.50 per gallon. On May 1, the price was $4.00 per gallon. On June 1, it was back down to $3.50 per gallon.
Between April 1 and May 1, Bob’s price increased by$0.50*** , or 14.29%*** .
Between May 1 and June 1, Bob’s price decreased by$0.50*** , or12.50% ***.
Suppose that at a gas station across the street, prices are always 20% higher than Bob’s. In absolute dollar terms, the difference between Bob’s prices and the prices across the street is greater*** when gas costs $4.00 than when gas costs $3.50.

Can you check and see if my answers with the asterisks are correct? Also, I am really STUCK on this question..

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 2.75%. This change of ____ percentage points means that the Fed raised its target by approximately ____.

The options for the first blank section are : 0.27, 0.75, 0.0075, and 0.375
For the second blank section, the options are: 37.5%, 0.75&, 27.27%, and 75%.

Thank you so much!

Answer 1

Hi Angelica, this is Vip.

 

The answers you filled in are correct. The thing that is tripping you up about the last one is "taking a percent of a percent," I think.

 

Think of percents (from the Latin, per = "for (every)" + centum = "hundred") like actual cents out of a dollar. One penny is 1% of a dollar. Thus, your question could be asked:

 

This change of ___ pennies (from $2 to $2.75) means that the Fed raised its target by approximately ___.

 

Since you have proven you knew what to divide by what, I am happy to give you the answer: 0.75, 37.5%.

 

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