Question 1

The consumer price index is used to

Accepted Answer

A)   convert nominal GDP into real GDP.
B)   turn dollar figures into meaningful measures of purchasing power.
C)   characterize the types of goods and services that consumers purchase.
D)   measure the quantity of goods and services that the economy produces.E) A) and C)
F) None of the above

Question 2

In the United States, real interest rates were

Accepted Answer

A)   high in the 1970s and 1990s.
B)   low in the 1970s and 1990s.
C)   high in the 1970s and low in the 1990s.
D)   low in the 1970s and high in the 1990s.E) A) and B)
F) A) and C)

Question 3

Table 24-14
The table below lists the per pound prices of meat and potatoes for the months of January, February, and March. Assume that the typical consumer buys 25 pounds of meat and 15 pounds of potatoes each month, and that January is the base period.
 
-Refer to Table 24-14. Calculate the cost of a basket of goods for each month.

Accepted Answer

110 in January, 93.5...

Question 4

Table 24-7. The table below applies to an economy with only two goods - hamburgers and hot dogs. The fixed basket consists of 4 hamburgers and 8 hot dogs.
 
-Refer to Table 24-7. Which of the following scenarios is consistent with this statement? "The rate of inflation was 23.75 percent for 2011."

Accepted Answer

A)   The price of a hot dog was $2.44 rather than $3.30 in 2010, with other prices in the table remaining fixed.
B)   The price of a hot dog was $4.22 rather than $3.63 in 2011, with other prices in the table remaining fixed..
C)   The price of a hamburger was $3.80 rather than $5.50 in 2010, with other prices in the table remaining fixed.
D)   The price of a hamburger was $6.60 rather than $5.61 in 2011, with other prices in the table remaining fixed.E) A) and B)
F) None of the above

Question 5

If the nominal interest rate is 5 percent and the rate of inflation is -2.5 percent, then the real interest rate is

Accepted Answer

A)   -7.5 percent.
B)   -2.5 percent.
C)   2.5 percent.
D)   7.5 percent.E) None of the above
F) A) and B)

Question 6

When the price of Italian wine rises, this change is reflected in the U.S. CPI but not in the U.S. GDP deflator.

Accepted Answer

A) True 
 B)False

Question 7

Table 24-6
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 24-6. 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) None of the above
F) All of the above

Question 8

When box office receipts are not corrected for inflation,

Accepted Answer

A)   The Sound of Music ranks as the most popular movie of all time.
B)   Gone with the Wind does not rank as one of the 50 most popular movies of all time.
C)   Titanic ranks as the most popular movie of all time.
D)   Avatar does not rank as one of the 50 most popular movies of all time.E) None of the above
F) A) and D)

Question 9

In an imaginary economy, consumers buy only hot dogs and hamburgers. The fixed basket consists of 10 hot dogs and 6 hamburgers. A hot dog cost $3 in 2006 and $5.40 in 2007. A hamburger cost $5 in 2006 and $6 in 2007. Which of the following statements is correct?

Accepted Answer

A)   When 2006 is chosen as the base year, the consumer price index is 90 in 2007.
B)   When 2006 is chosen as the base year, the inflation rate is 150 percent in 2007.
C)   When 2007 is chosen as the base year, the consumer price index is 100 in 2006.
D)   When 2007 is chosen as the base year, the inflation rate is 50 percent in 2007.E) A) and B)
F) C) and D)

Question 10

In the basket of goods that is used to compute the consumer price index, the three largest categories of consumer spending are

Accepted Answer

A)   housing, transportation, and recreation.
B)   housing, transportation, and food & beverages.
C)   housing, food & beverages, and education & communication.
D)   housing, medical care, and education & communication.E) A) and C)
F) C) and D)

Question 11

The goal of the consumer price index is to measure changes in the

Accepted Answer

A)   costs of production.
B)   cost of living.
C)   relative prices of consumer goods.
D)   production of consumer goods.E) B) and C)
F) A) and B)

Question 12

Table 24-1
The table below lists annual consumer price index and inflation rates for a country over the period 2005-2010. Assume the year 2005 is used as the base year.
 
-Refer to Table 24-1. What belongs in space D?

Accepted Answer

A)   12%
B)   154
C)   40%
D)   15%E) A) and B)
F) A) and C)

Question 13

Table 24-12. Will's expenditures on food for three consecutive years, along with other values, are presented in the table below.
 
-Refer to Table 24-12. Suppose Will's 2009 food expenditures in 2011 dollars amount to $5,750. Then x, the consumer price index for 2011, has a value of

Accepted Answer

A)   184.0.
B)   185.8.
C)   187.5.
D)   189.4.E) C) and D)
F) None of the above

Question 14

Which of the following is not a widely acknowledged problem with using the CPI as a measure of the cost of living?

Accepted Answer

A)   substitution bias
B)   introduction of new goods
C)   unmeasured quality change
D)   unmeasured price changeE) None of the above
F) B) and C)

Question 15

To which of the problems in the construction of the CPI is the invention of pocket-sized computers 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 16

The CPI is more commonly used as a gauge of inflation than the GDP deflator is because

Accepted Answer

A)   the CPI is easier to measure.
B)   the CPI is calculated more often than the GDP deflator is.
C)   the CPI better reflects the goods and services bought by consumers.
D)   the GDP deflator cannot be used to gauge inflation.E) None of the above
F) A) and D)

Question 17

Which is the most accurate statement about the GDP deflator and the consumer price index?

Accepted Answer

A)   The GDP deflator compares the price of a fixed basket of goods and services to the price of the basket in the base year, whereas the consumer price index compares the price of currently produced goods and services to the price of the same goods and services in the base year.
B)   The consumer price index compares the price of a fixed basket of goods and services to the price of the basket in the base year, whereas the GDP deflator compares the price of currently produced goods and services to the price of the same goods and services in the base year.
C)   Both the GDP deflator and the consumer price index compare the price of a fixed basket of goods and services to the price of the basket in the base year.
D)   Both the GDP deflator and the consumer price index compare the price of currently produced goods and services to the price of the same goods and services in the base year.E) None of the above
F) B) and D)

Question 18

Suppose the price index was 110 in 2004, 120 in 2005, and 125 in 2006. Which of the following statements is correct?

Accepted Answer

A)   The economy experienced inflation between 2004 and 2005 and between 2005 and 2006.
B)   The inflation rate was positive between 2004 and 2005, and it was negative between 2005 and 2006.
C)   The inflation rate was higher between 2005 and 2006 than it was between 2004 and 2005.
D)   All of the above are correct.E) B) and C)
F) All of the above

Question 19

Scenario 24-5
Suppose the residents of Mediaville spend all of their income on books, CDs, and DVDs. In 2009, they buy 400 books for $3,200, 200 CDs for $1,400, and 100 DVDs for $900. In 2010, they buy 360 books for $3,240, 250 CDs for $1,500, and 125 DVDs for $1,250. Assume that the market basket for the CPI is defined in the base year.
-Refer to Scenario 24-5. What are the prices of books, CDs, and DVDs in 2009?

Accepted Answer

In 2009, books are $...

Question 20

If the real value of an item bought ten years ago is less than it's nominal value at that time, what can one infer about the change in the overall price level during this ten year period?

Accepted Answer

One can infer that t...

Exam 11: Measuring the Cost of Living

Table 24-7. The table below applies to an economy with only two goods - hamburgers and hot dogs. The fixed basket consists of 4 hamburgers and 8 hot dogs. -Refer to Table 24-7. Which of the following scenarios is consistent with this statement? "The rate of inflation was 23.75 percent for 2011."

Correct Answer
verified

Table 24-1 The table below lists annual consumer price index and inflation rates for a country over the period 2005-2010. Assume the year 2005 is used as the base year. -Refer to Table 24-1. What belongs in space D?

Correct Answer
verified

To which of the problems in the construction of the CPI is the invention of pocket-sized computers most relevant?

Correct Answer
verified

If the real value of an item bought ten years ago is less than it's nominal value at that time, what can one infer about the change in the overall price level during this ten year period?

Correct Answer
verified
One can infer that t...
View Answer

The CPI is more commonly used as a gauge of inflation than the GDP deflator is because

Correct Answer
verified

Table 24-12. Will's expenditures on food for three consecutive years, along with other values, are presented in the table below. -Refer to Table 24-12. Suppose Will's 2009 food expenditures in 2011 dollars amount to $5,750. Then x, the consumer price index for 2011, has a value of

Correct Answer
verified

If the nominal interest rate is 5 percent and the rate of inflation is -2.5 percent, then the real interest rate is

Correct Answer
verified

Table 24-6 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 24-6. If the base year is 2009, then the economy's inflation rate in 2010 is

Correct Answer
verified

In an imaginary economy, consumers buy only hot dogs and hamburgers. The fixed basket consists of 10 hot dogs and 6 hamburgers. A hot dog cost $3 in 2006 and $5.40 in 2007. A hamburger cost $5 in 2006 and $6 in 2007. Which of the following statements is correct?

Correct Answer
verified

The goal of the consumer price index is to measure changes in the

Correct Answer
verified

In the basket of goods that is used to compute the consumer price index, the three largest categories of consumer spending are

Correct Answer
verified

The consumer price index is used to

Correct Answer
verified

Correct Answer
verified
In 2009, books are $...
View Answer

When the price of Italian wine rises, this change is reflected in the U.S. CPI but not in the U.S. GDP deflator.

Correct Answer
verified

In the United States, real interest rates were

Correct Answer
verified

When box office receipts are not corrected for inflation,

Correct Answer
verified

Which is the most accurate statement about the GDP deflator and the consumer price index?

Correct Answer
verified

Which of the following is not a widely acknowledged problem with using the CPI as a measure of the cost of living?

Correct Answer
verified

Suppose the price index was 110 in 2004, 120 in 2005, and 125 in 2006. Which of the following statements is correct?

Correct Answer
verified

Correct Answer
verified
110 in January, 93.5...
View Answer

Exam 11: Measuring the Cost of Living

Table 24-7. The table below applies to an economy with only two goods - hamburgers and hot dogs. The fixed basket consists of 4 hamburgers and 8 hot dogs. -Refer to Table 24-7. Which of the following scenarios is consistent with this statement? "The rate of inflation was 23.75 percent for 2011."

Correct AnswerverifiedShow Answer

Table 24-1 The table below lists annual consumer price index and inflation rates for a country over the period 2005-2010. Assume the year 2005 is used as the base year. -Refer to Table 24-1. What belongs in space D?

Correct AnswerverifiedShow Answer

To which of the problems in the construction of the CPI is the invention of pocket-sized computers most relevant?

Correct AnswerverifiedShow Answer

If the real value of an item bought ten years ago is less than it's nominal value at that time, what can one infer about the change in the overall price level during this ten year period?

Correct AnswerverifiedOne can infer that t...View AnswerShow Answer

The CPI is more commonly used as a gauge of inflation than the GDP deflator is because

Correct AnswerverifiedShow Answer

Table 24-12. Will's expenditures on food for three consecutive years, along with other values, are presented in the table below. -Refer to Table 24-12. Suppose Will's 2009 food expenditures in 2011 dollars amount to $5,750. Then x, the consumer price index for 2011, has a value of

Correct AnswerverifiedShow Answer

If the nominal interest rate is 5 percent and the rate of inflation is -2.5 percent, then the real interest rate is

Correct AnswerverifiedShow Answer

Table 24-6 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 24-6. If the base year is 2009, then the economy's inflation rate in 2010 is

Correct AnswerverifiedShow Answer

In an imaginary economy, consumers buy only hot dogs and hamburgers. The fixed basket consists of 10 hot dogs and 6 hamburgers. A hot dog cost $3 in 2006 and $5.40 in 2007. A hamburger cost $5 in 2006 and $6 in 2007. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

The goal of the consumer price index is to measure changes in the

Correct AnswerverifiedShow Answer

In the basket of goods that is used to compute the consumer price index, the three largest categories of consumer spending are

Correct AnswerverifiedShow Answer

The consumer price index is used to

Correct AnswerverifiedShow Answer

Correct AnswerverifiedIn 2009, books are $...View AnswerShow Answer

When the price of Italian wine rises, this change is reflected in the U.S. CPI but not in the U.S. GDP deflator.

Correct AnswerverifiedShow Answer

In the United States, real interest rates were

Correct AnswerverifiedShow Answer

When box office receipts are not corrected for inflation,

Correct AnswerverifiedShow Answer

Which is the most accurate statement about the GDP deflator and the consumer price index?

Correct AnswerverifiedShow Answer

Which of the following is not a widely acknowledged problem with using the CPI as a measure of the cost of living?

Correct AnswerverifiedShow Answer

Suppose the price index was 110 in 2004, 120 in 2005, and 125 in 2006. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Correct Answerverified110 in January, 93.5...View AnswerShow Answer

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One can infer that t...
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In 2009, books are $...
View Answer

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110 in January, 93.5...
View Answer