Question 1

For an imaginary economy,the consumer price index was 115.00 in 2004,126.50 in 2005,and 136.62 in 2006.Which of the following statements is correct?

Accepted Answer

A)  For this economy,the base year must be 2004.
B)  If the basket of goods that is used to calculate the CPI cost $75.00 in the base year,then that basket of goods cost $115.00 in 2004.
C)  This economy's rate of inflation for 2006 is 10.12 percent.
D)  None of the above is correct.E) B) and D)
F) None of the above

Question 2

Suppose a basket of goods and services has been selected to calculate the CPI and 2012 has been selected as the base year.In 2012,the basket's cost was $50;in 2014,the basket's cost was $52;and in 2016,the basket's cost was $55.The value of the CPI in 2016 was

Accepted Answer

A)  90.9.
B)  104.0.
C)  105.0.
D)  110.0.E) A) and B)
F) All of the above

Question 3

Which of the following changes in the price index produces the greatest rate of inflation: 100 to 110,150 to 165,or 180 to 198?

Accepted Answer

A)  100 to 110
B)  150 to 165
C)  180 to 198
D)  All of these changes produce the same rate of inflation.E) B) and D)
F) A) and C)

Question 4

If the quality of a good deteriorates while its price remains the same,then the value of a dollar

Accepted Answer

A)  rises and the cost of living increases.
B)  rises and the cost of living decreases.
C)  falls and the cost of living increases.
D)  falls and the cost of living decreases.E) A) and C)
F) A) and B)

Question 5

In computing the consumer price index,a base year is chosen.Which of the following statements about the base year is correct?

Accepted Answer

A)  The base year is always the first year among the years for which computations are being made.
B)  It is necessary to designate a base year only in the simplest case of two goods;in more realistic cases,it is not necessary to designate a base year.
C)  The value of the consumer price index is always 100 in the base year.
D)  The base year is always the year in which the cost of the basket was highest among the years for which computations are being made.E) A) and C)
F) B) and C)

Question 6

From 2013 to 2014,the CPI for medical care increased from 150 to 159.What was the inflation rate for medical care?

Accepted Answer

A)  5.7 percent
B)  6.0 percent
C)  9.0 percent
D)  59.0 percentE) A) and B)
F) B) and C)

Question 7

Which of the following is not an example of a price index computed by the Bureau of Labor Statistics?

Accepted Answer

A)  the Los Angeles price index
B)  the energy price index
C)  the producer price index
D)  the stock price indexE) B) and D)
F) All of the above

Question 8

Core CPI is​

Accepted Answer

A)  ​the CPI including only food,clothing,and energy.
B)  ​the CPI including only food and energy.
C)  ​the CPI excluding food,clothing,and energy.
D)  ​the CPI excluding food and energy.E) A) and D)
F) A) and C)

Question 9

In the United States,if the price of imported oil rises so that the prices of gasoline and heating oil rise,then the

Accepted Answer

A)  GDP deflator rises much more than does the consumer price index.
B)  consumer price index rises much more than does the GDP deflator.
C)  GDP deflator and the consumer price index rise by about the same amount.
D)  consumer price index rises slightly more than does the GDP deflator.E) C) and D)
F) B) and D)

Question 10

The GDP Deflator reflects

Accepted Answer

A)  the prices of all final goods and services currently produced domestically,as does the CPI.
B)  the price of a fixed basket of goods and services purchased by a typical consumer,as does the CPI.
C)  the prices of all final goods and services currently produced domestically,while the CPI reflects the price of a fixed basket of goods and services purchased by a typical consumer.
D)  the price of a fixed basket of goods and services purchased by a typical consumer,while the CPI reflects the prices of all final goods and services produced domestically.E) A) and D)
F) C) and D)

Question 11

Changes in the producer price index are often thought to be useful in predicting changes in

Accepted Answer

A)  stock prices.
B)  the consumer price index.
C)  the unemployment rate.
D)  the rate of output of goods and services.E) None of the above
F) C) and D)

Question 12

Suppose lawn mowers are part of the market basket used to compute the CPI.Suppose also that the quality of lawn mowers deteriorates while the price of lawn mowers stays the same.If the Bureau of Labor Statistics is able to precisely adjust the CPI for the improvement in quality,then,other things equal,

Accepted Answer

A)  the CPI will rise.
B)  the CPI will fall.
C)  the CPI will stay the same.
D)  lawn mowers will no longer be included in the market basket.E) B) and D)
F) All of the above

Question 13

The introduction of a new good

Accepted Answer

A)  increases the cost of maintaining the same level of economic well-being.
B)  decreases the cost of maintaining the same level of economic well-being.
C)  has no impact on the cost of maintaining the same level of economic well-being.
D)  may increase or decrease the cost of maintaining the same level of economic well-being,depending on how expensive the new good is.E) A) and B)
F) C) and D)

Question 14

If the consumer price index was 96 in 2012,100 in 2013,and 102 in 2014,then the base year must be

Accepted Answer

A)  2012.
B)  2013.
C)  2014.
D)  The base year cannot be determined from the given information.E) C) and D)
F) B) and C)

Question 15

An important difference between the GDP deflator and the consumer price index is that

Accepted Answer

A)  the GDP deflator reflects the prices of goods and services bought by producers,whereas the consumer price index reflects the prices of goods and services bought by consumers.
B)  the GDP deflator reflects the prices of all final goods and services produced domestically,whereas the consumer price index reflects the prices of goods and services bought by consumers.
C)  the GDP deflator reflects the prices of all final goods and services produced by a nation's citizens,whereas the consumer price index reflects the prices of all final goods and services bought by consumers.
D)  the GDP deflator reflects the prices of all final goods and services bought by producers and consumers,whereas the consumer price index reflects the prices of all final goods and services bought by consumers.E) A) and C)
F) C) and D)

Question 16

The price index was 128 in 2013,and the inflation rate was 24 percent between 2012 and 2013.The price index in 2012 was

Accepted Answer

A)  104.0.
B)  103.2.
C)  158.7.
D)  152.0.E) All of the above
F) A) and D)

Question 17

Suppose the price of a gallon of ice cream rises from $4 to $5 and the price of a can of coffee rises from $2 to $2.50.If the CPI rises from 150 to 177,then people likely will buy

Accepted Answer

A)  more ice cream and more coffee.
B)  more ice cream and less coffee.
C)  less ice cream and more coffee.
D)  less ice cream and less coffee.E) A) and C)
F) C) and D)

Question 18

Which of the following is the most accurate statement?

Accepted Answer

A)  In the 1970s,the late 1980s,1990s,and 2000s,the GDP deflator and the CPI both showed high rates of inflation.
B)  In the 1970s,both the GDP deflator and the consumer price index showed high rates of inflation,and in the late 1980s,1990s,and 2000s,both measures showed low rates of inflation.
C)  In the 1970s,both the GDP deflator and the consumer price index showed low rates of inflation,and in the late 1980s,1990s,and 2000s,both measures showed high rates of inflation.
D)  In the 1970s,the late 1980s,1990s,and 2000s,the GDP deflator and the CPI both showed low rates of inflation.E) C) and D)
F) All of the above

Question 19

For purposes of calculating the CPI,the housing category of consumer spending includes the cost of

Accepted Answer

A)  shelter.
B)  fuel and other utilities.
C)  household furnishings and operation.
D)  All of the above are correct.E) B) and D)
F) B) and C)

Question 20

Which of these events would cause the consumer price index to overstate the increase in the cost of living?

Accepted Answer

A)  Car makers benefit from a new technology that allows them to sell higher-quality cars to consumers with no increase in price.
B)  Energy prices decrease,and consumers respond by buying more gas and electricity.
C)  A new good is introduced that renders cellular telephones inferior and obsolete.
D)  All of the above are correct.E) None of the above
F) A) and B)

Exam 11: Measuring the Cost of Living: The Consumer Price Index

From 2013 to 2014,the CPI for medical care increased from 150 to 159.What was the inflation rate for medical care?

Correct Answer
verified

If the consumer price index was 96 in 2012,100 in 2013,and 102 in 2014,then the base year must be

Correct Answer
verified

Suppose a basket of goods and services has been selected to calculate the CPI and 2012 has been selected as the base year.In 2012,the basket's cost was $50;in 2014,the basket's cost was $52;and in 2016,the basket's cost was $55.The value of the CPI in 2016 was

Correct Answer
verified

Which of the following changes in the price index produces the greatest rate of inflation: 100 to 110,150 to 165,or 180 to 198?

Correct Answer
verified

An important difference between the GDP deflator and the consumer price index is that

Correct Answer
verified

The price index was 128 in 2013,and the inflation rate was 24 percent between 2012 and 2013.The price index in 2012 was

Correct Answer
verified

For an imaginary economy,the consumer price index was 115.00 in 2004,126.50 in 2005,and 136.62 in 2006.Which of the following statements is correct?

Correct Answer
verified

In the United States,if the price of imported oil rises so that the prices of gasoline and heating oil rise,then the

Correct Answer
verified

The GDP Deflator reflects

Correct Answer
verified

The introduction of a new good

Correct Answer
verified

Which of the following is not an example of a price index computed by the Bureau of Labor Statistics?

Correct Answer
verified

For purposes of calculating the CPI,the housing category of consumer spending includes the cost of

Correct Answer
verified

In computing the consumer price index,a base year is chosen.Which of the following statements about the base year is correct?

Correct Answer
verified

Correct Answer
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Which of the following is the most accurate statement?

Correct Answer
verified

Suppose the price of a gallon of ice cream rises from $4 to $5 and the price of a can of coffee rises from $2 to $2.50.If the CPI rises from 150 to 177,then people likely will buy

Correct Answer
verified

Which of these events would cause the consumer price index to overstate the increase in the cost of living?

Correct Answer
verified

If the quality of a good deteriorates while its price remains the same,then the value of a dollar

Correct Answer
verified

Core CPI is

Correct Answer
verified

Changes in the producer price index are often thought to be useful in predicting changes in

Correct Answer
verified

Exam 11: Measuring the Cost of Living: The Consumer Price Index

From 2013 to 2014,the CPI for medical care increased from 150 to 159.What was the inflation rate for medical care?

Correct AnswerverifiedShow Answer

If the consumer price index was 96 in 2012,100 in 2013,and 102 in 2014,then the base year must be

Correct AnswerverifiedShow Answer

Suppose a basket of goods and services has been selected to calculate the CPI and 2012 has been selected as the base year.In 2012,the basket's cost was $50;in 2014,the basket's cost was $52;and in 2016,the basket's cost was $55.The value of the CPI in 2016 was

Correct AnswerverifiedShow Answer

Which of the following changes in the price index produces the greatest rate of inflation: 100 to 110,150 to 165,or 180 to 198?

Correct AnswerverifiedShow Answer

An important difference between the GDP deflator and the consumer price index is that

Correct AnswerverifiedShow Answer

The price index was 128 in 2013,and the inflation rate was 24 percent between 2012 and 2013.The price index in 2012 was

Correct AnswerverifiedShow Answer

For an imaginary economy,the consumer price index was 115.00 in 2004,126.50 in 2005,and 136.62 in 2006.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

In the United States,if the price of imported oil rises so that the prices of gasoline and heating oil rise,then the

Correct AnswerverifiedShow Answer

The GDP Deflator reflects

Correct AnswerverifiedShow Answer

The introduction of a new good

Correct AnswerverifiedShow Answer

Which of the following is not an example of a price index computed by the Bureau of Labor Statistics?

Correct AnswerverifiedShow Answer

For purposes of calculating the CPI,the housing category of consumer spending includes the cost of

Correct AnswerverifiedShow Answer

In computing the consumer price index,a base year is chosen.Which of the following statements about the base year is correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following is the most accurate statement?

Correct AnswerverifiedShow Answer

Suppose the price of a gallon of ice cream rises from $4 to $5 and the price of a can of coffee rises from $2 to $2.50.If the CPI rises from 150 to 177,then people likely will buy

Correct AnswerverifiedShow Answer

Which of these events would cause the consumer price index to overstate the increase in the cost of living?

Correct AnswerverifiedShow Answer

If the quality of a good deteriorates while its price remains the same,then the value of a dollar

Correct AnswerverifiedShow Answer

Core CPI is​

Correct AnswerverifiedShow Answer

Changes in the producer price index are often thought to be useful in predicting changes in

Correct AnswerverifiedShow Answer

Correct Answer
verified

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Correct Answer
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Core CPI is

Correct Answer
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Correct Answer
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