Question 1

Table 11-5
The table below pertains to Napandsnack,an economy in which the typical consumer's basket consists of 2 pillows and 15 hotdogs.
 
-Refer to Table 11-5.If the base year is 2009,then the economy's inflation rate in 2010 is

Accepted Answer

A)   20 percent.
B)   25 percent.
C)   30 percent.
D)   120 percent.E) B) and C)
F) B) and D)

Question 2

Suppose a basket of goods and services has been selected to calculate the consumer price index.In 2005,the basket of goods cost $108.00;in 2006,it cost $135.00;and in 2007,it cost $168.75.Which of the following statements is correct?

Accepted Answer

A)   Using 2005 as the base year,the economy's inflation rate was higher in 2007 than it was in 2006.
B)   If 2007 is the base year,then the CPI is 33.75 in 2006.
C)   If the CPI is 156.25 in 2007,then 2005 is the base year.
D)   Using 2005 as the base year,the economy's inflation rate for 2006 was 27 percent.E) A) and B)
F) A) and D)

Question 3

Consumer price index =  * 100.

Accepted Answer

A) True 
 B)False

Question 4

When looking at a graph of nominal and real interest rates you notice the graph for nominal rates and the graph for real rates cross each other many times.From this you conclude

Accepted Answer

A)   consumer prices sometimes rose and sometimes fell in the time frame represented on the graph.
B)   consumer prices were always rising in the time frame represented on the graph.
C)   the economy never experienced a recession in the time frame represented on the graph.
D)   GDP was always increasing for the time frame represented on the graph.E) All of the above
F) A) and B)

Question 5

The group of goods and services used to compute the GDP deflator changes automatically over time,but the group of goods and services used to compute the CPI does not.

Accepted Answer

A) True 
 B)False

Question 6

The inflation rate reported in the news is usually calculated from the GDP deflator rather than the consumer price index.

Accepted Answer

A) True 
 B)False

Question 7

In a simple economy,people consume only 2 goods,food and clothing.The market basket of goods used to compute the CPI consists of 50 units of food and 10 units of clothing.

a.What are the percentage increases in the price of food and in the price of clothing?
b.What is the percentage increase in the CPI?
c.Do these price changes affect all consumers to the same extent? Explain.

Accepted Answer

a.The price of food increased by 50 perc...

Question 8

One of the differences between the GDP deflator and the consumer price index is

Accepted Answer

A)   the GDP deflator includes income earned by American citizens working in foreign countries and the consumer price index is based solely on purchases made in the U.S.
B)   the consumer price index basket of goods is updated constantly by the Bureau of Labor Statistics whereas the GDP deflator is updated only occasionally.
C)   the consumer price index includes items not included in the GDP deflator such as airplanes purchased by the Air Force.
D)   the GDP deflator reflects prices for all goods and services produced domestically and the consumer price index reflects prices for some goods and services bought by consumers.E) B) and D)
F) A) and B)

Question 9

When new goods are introduced,consumers have more variety from which to choose.As a result,each dollar is worth

Accepted Answer

A)   more,and the cost of living increases.
B)   more,and the cost of living decreases.
C)   less,and the cost of living increases.
D)   less,and the cost of living decreases.E) B) and C)
F) A) and B)

Question 10

The nominal interest rate tells you how fast the number of dollars in your bank account rises over time.

Accepted Answer

A) True 
 B)False

Question 11

Table 11-3
The table below pertains to Studious,an economy in which the typical consumer's basket consists of 5 books and 10 calculators.
 
-Refer to Table 11-3.If 2006 is the base year,then the consumer price index was

Accepted Answer

A)   100 in 2006,135 in 2007,and 155 in 2008.
B)   100 in 2006,270 in 2007,and 310 in 2008.
C)   200 in 2006,135 in 2007,and 155 in 2008.
D)   200 in 2006,270 in 2007,and 310 in 2008.E) C) and D)
F) B) and D)

Question 12

In the U.S. ,when the price of oil rises,the CPI rises by much more than does the GDP deflator.

Accepted Answer

A) True 
 B)False

Question 13

In 1931,President Herbert Hoover was paid a salary of $75,000.Government statistics show a consumer price index of 15.2 for 1931 and 214.5 for 2009.President Hoover's 1931 salary was equivalent to a 2009 salary of about

Accepted Answer

A)   $5,507.
B)   $1,058,388.
C)   $1,140,000.
D)   $15,525,000.E) B) and C)
F) A) and C)

Question 14

Table 11-12.Will's expenditures on food for three consecutive years,along with other values,are presented in the table below.
 
-Refer to Table 11-12.Suppose Will's 2009 food expenditures in 2011 dollars amount to $5,750.Then the inflation rate for 2011 is about

Accepted Answer

A)   9.08 percent.
B)   9.52 percent.
C)   10.24 percent.
D)   10.78 percent.E) C) and D)
F) B) and C)

Question 15

The term inflation is used to describe a situation in which

Accepted Answer

A)   the overall level of prices in the economy is increasing.
B)   incomes in the economy are increasing.
C)   stock-market prices are rising.
D)   the economy is growing rapidly.E) A) and D)
F) B) and C)

Question 16

For some racquet sports,there have been increases in the size of the racquets;also,the methods and materials used for making racquets have improved.To which problem in the construction of the CPI is this situation most relevant?

Accepted Answer

A)   substitution bias
B)   introduction of new goods
C)   unmeasured quality change
D)   income biasE) A) and D)
F) A) and C)

Question 17

The producer price index measures the cost of a basket of goods and services bought by firms rather than consumers.

Accepted Answer

A) True 
 B)False

Question 18

The price index was 136 in one year and 142 in the next year.What was the inflation rate between the two years?

Accepted Answer

A)   1.04 percent
B)   4.41 percent
C)   6.00 percent
D)   42.00 percentE) B) and C)
F) A) and D)

Question 19

Which of the following agencies calculates the CPI?

Accepted Answer

A)   the National Price Board
B)   the Department Of Weight and Measurements
C)   the Bureau of Labor Statistics
D)   the Congressional Budget OfficeE) A) and B)
F) None of the above

Question 20

As long as prices are rising over time,then

Accepted Answer

A)   the nominal interest rate exceeds the real interest rate.
B)   the real interest rate exceeds the nominal interest rate.
C)   the real interest rate is positive.
D)   the nominal interest rate is a better indicator than the real interest rate of how fast the purchasing power of your bank account is changing over time.E) A) and B)
F) All of the above

Exam 24: Measuring the Cost of Living

The nominal interest rate tells you how fast the number of dollars in your bank account rises over time.

Correct Answer
verified

In 1931,President Herbert Hoover was paid a salary of $75,000.Government statistics show a consumer price index of 15.2 for 1931 and 214.5 for 2009.President Hoover's 1931 salary was equivalent to a 2009 salary of about

Correct Answer
verified

The inflation rate reported in the news is usually calculated from the GDP deflator rather than the consumer price index.

Correct Answer
verified

Correct Answer
verified
a.The price of food increased by 50 perc...
View Answer

When looking at a graph of nominal and real interest rates you notice the graph for nominal rates and the graph for real rates cross each other many times.From this you conclude

Correct Answer
verified

The term inflation is used to describe a situation in which

Correct Answer
verified

Suppose a basket of goods and services has been selected to calculate the consumer price index.In 2005,the basket of goods cost $108.00;in 2006,it cost $135.00;and in 2007,it cost $168.75.Which of the following statements is correct?

Correct Answer
verified

As long as prices are rising over time,then

Correct Answer
verified

When new goods are introduced,consumers have more variety from which to choose.As a result,each dollar is worth

Correct Answer
verified

One of the differences between the GDP deflator and the consumer price index is

Correct Answer
verified

Table 11-3 The table below pertains to Studious,an economy in which the typical consumer's basket consists of 5 books and 10 calculators. -Refer to Table 11-3.If 2006 is the base year,then the consumer price index was

Correct Answer
verified

Table 11-12.Will's expenditures on food for three consecutive years,along with other values,are presented in the table below. -Refer to Table 11-12.Suppose Will's 2009 food expenditures in 2011 dollars amount to $5,750.Then the inflation rate for 2011 is about

Correct Answer
verified

Table 11-5 The table below pertains to Napandsnack,an economy in which the typical consumer's basket consists of 2 pillows and 15 hotdogs. -Refer to Table 11-5.If the base year is 2009,then the economy's inflation rate in 2010 is

Correct Answer
verified

In the U.S. ,when the price of oil rises,the CPI rises by much more than does the GDP deflator.

Correct Answer
verified

For some racquet sports,there have been increases in the size of the racquets;also,the methods and materials used for making racquets have improved.To which problem in the construction of the CPI is this situation most relevant?

Correct Answer
verified

Which of the following agencies calculates the CPI?

Correct Answer
verified

The group of goods and services used to compute the GDP deflator changes automatically over time,but the group of goods and services used to compute the CPI does not.

Correct Answer
verified

The producer price index measures the cost of a basket of goods and services bought by firms rather than consumers.

Correct Answer
verified

The price index was 136 in one year and 142 in the next year.What was the inflation rate between the two years?

Correct Answer
verified

Consumer price index = * 100.

Correct Answer
verified

Exam 24: Measuring the Cost of Living

The nominal interest rate tells you how fast the number of dollars in your bank account rises over time.

Correct AnswerverifiedShow Answer

In 1931,President Herbert Hoover was paid a salary of $75,000.Government statistics show a consumer price index of 15.2 for 1931 and 214.5 for 2009.President Hoover's 1931 salary was equivalent to a 2009 salary of about

Correct AnswerverifiedShow Answer

The inflation rate reported in the news is usually calculated from the GDP deflator rather than the consumer price index.

Correct AnswerverifiedShow Answer

Correct Answerverifieda.The price of food increased by 50 perc...View AnswerShow Answer

When looking at a graph of nominal and real interest rates you notice the graph for nominal rates and the graph for real rates cross each other many times.From this you conclude

Correct AnswerverifiedShow Answer

The term inflation is used to describe a situation in which

Correct AnswerverifiedShow Answer

Suppose a basket of goods and services has been selected to calculate the consumer price index.In 2005,the basket of goods cost $108.00;in 2006,it cost $135.00;and in 2007,it cost $168.75.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

As long as prices are rising over time,then

Correct AnswerverifiedShow Answer

When new goods are introduced,consumers have more variety from which to choose.As a result,each dollar is worth

Correct AnswerverifiedShow Answer

One of the differences between the GDP deflator and the consumer price index is

Correct AnswerverifiedShow Answer

Table 11-3 The table below pertains to Studious,an economy in which the typical consumer's basket consists of 5 books and 10 calculators. -Refer to Table 11-3.If 2006 is the base year,then the consumer price index was

Correct AnswerverifiedShow Answer

Table 11-12.Will's expenditures on food for three consecutive years,along with other values,are presented in the table below. -Refer to Table 11-12.Suppose Will's 2009 food expenditures in 2011 dollars amount to $5,750.Then the inflation rate for 2011 is about

Correct AnswerverifiedShow Answer

Table 11-5 The table below pertains to Napandsnack,an economy in which the typical consumer's basket consists of 2 pillows and 15 hotdogs. -Refer to Table 11-5.If the base year is 2009,then the economy's inflation rate in 2010 is

Correct AnswerverifiedShow Answer

In the U.S. ,when the price of oil rises,the CPI rises by much more than does the GDP deflator.

Correct AnswerverifiedShow Answer

For some racquet sports,there have been increases in the size of the racquets;also,the methods and materials used for making racquets have improved.To which problem in the construction of the CPI is this situation most relevant?

Correct AnswerverifiedShow Answer

Which of the following agencies calculates the CPI?

Correct AnswerverifiedShow Answer

The group of goods and services used to compute the GDP deflator changes automatically over time,but the group of goods and services used to compute the CPI does not.

Correct AnswerverifiedShow Answer

The producer price index measures the cost of a basket of goods and services bought by firms rather than consumers.

Correct AnswerverifiedShow Answer

The price index was 136 in one year and 142 in the next year.What was the inflation rate between the two years?

Correct AnswerverifiedShow Answer

Consumer price index = * 100.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a.The price of food increased by 50 perc...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified