Question 1

When the relative price of a good increases, how will consumers respond?

Accepted Answer

A)  by buying more of it and its substitutes 
B)  by buying less of it and its substitutes 
C)  by buying less of it and more of its substitutes 
D)  by buying more of it and less of its substitutes 
A)  by buying more of it and its substitutes 
B)  by buying less of it and its substitutes 
C)  by buying less of it and more of its substitutes 
D)  by buying more of it and less of its substitutes

Question 2

For the average Canadian consumer, what percentage of total consumption does shelter and food expenditures make up, respectively?

Accepted Answer

A)  27.2, 16.2 
B)  14.1, 17.5 
C)  19.3, 18.1 
D)  16.6, 19.7 
A)  27.2, 16.2 
B)  14.1, 17.5 
C)  19.3, 18.1 
D)  16.6, 19.7

Question 3

The Canadian income tax system is indexed to the CPI.

Accepted Answer

A) True 
 B)False

Question 4

Which change in the price index shows the greatest rate of inflation?

Accepted Answer

A)  100 to 115 
B)  150 to 180 
C)  180 to 210 
D)  220 to 255 
A)  100 to 115 
B)  150 to 180 
C)  180 to 210 
D)  220 to 255

Question 5

In Canada, if the price of imported oil rises so that the price of gasoline and heating oil rise, what happens to the GDP deflator and the consumer price index?

Accepted Answer

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

Question 6

The inflation rate is computed as 100 × (the current year CPI - the CPI of the previous year) ÷ the CPI of the previous year.

Accepted Answer

A) True 
 B)False

Question 7

How often does the basket of goods in the consumer price index change?

Accepted Answer

A)  occasionally, as does the basket of goods used to compute the GDP deflator 
B)  yearly, as does the basket of goods used to compute the GDP deflator 
C)  occasionally, while the basket of goods used to compute the GDP deflator changes yearly 
D)  yearly, while the basket of goods used to compute the GDP deflator changes occasionally 
A)  occasionally, as does the basket of goods used to compute the GDP deflator 
B)  yearly, as does the basket of goods used to compute the GDP deflator 
C)  occasionally, while the basket of goods used to compute the GDP deflator changes yearly 
D)  yearly, while the basket of goods used to compute the GDP deflator changes occasionally

Question 8

Suppose that dairy products have risen in price less than prices in general over the past several years. Which problem in the construction of the CPI is this price increase most relevant to?

Accepted Answer

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

Question 9

Which statement best describes the evolution of the GDP deflator and the consumer price index over the past decades?

Accepted Answer

A)  In the late 1970s, the late 1980s, and the early 1990s, the GDP deflator showed high rates of inflation while the consumer price index showed low rates of inflation. 
B)  In the late 1970s, both the GDP deflator and the consumer price index showed high rates of inflation, and in the late 1980s and the early 1990s, both measures showed low inflation. 
C)  In the late 1970s, both the GDP deflator and the consumer price index showed low rates of inflation, and in the late 1980s and the early 1990s, both measures showed high rates of inflation. 
D)  In the late 1970s, the late 1980s, and the early 1990s, both the GDP deflator and the consumer price index showed high rates of inflation. 
A)  In the late 1970s, the late 1980s, and the early 1990s, the GDP deflator showed high rates of inflation while the consumer price index showed low rates of inflation. 
B)  In the late 1970s, both the GDP deflator and the consumer price index showed high rates of inflation, and in the late 1980s and the early 1990s, both measures showed low inflation. 
C)  In the late 1970s, both the GDP deflator and the consumer price index showed low rates of inflation, and in the late 1980s and the early 1990s, both measures showed high rates of inflation. 
D)  In the late 1970s, the late 1980s, and the early 1990s, both the GDP deflator and the consumer price index showed high rates of inflation.

Question 10

The 2019 CPI was 225 and the 1982 CPI was 96.5. How much would you need in 2019 in order to buy what you were able to buy with the $1000 in 1982?

Accepted Answer

A)  $960.00 
B)  $1777.77 
C)  $1834.20 
D)  $2331.61 
A)  $960.00 
B)  $1777.77 
C)  $1834.20 
D)  $2331.61

Question 11

If the current-year CPI is 140, then, since the base year, the price level has increased 40 percent.

Accepted Answer

A) True 
 B)False

Question 12

From October 2018 to October 2019, the CPI in country A rose from 116.5 to 119.8. In country B, it rose from 97.2 to 102.3. What were the inflation rates in the two countries?

Accepted Answer

A)  3.3 percent in A and 6.7 percent in B 
B)  3.3 percent in A and 5.2 percent in B 
C)  2.8 percent in A and 6.7 percent in B 
D)  2.8 percent in A and 5.2 percent in B 
A)  3.3 percent in A and 6.7 percent in B 
B)  3.3 percent in A and 5.2 percent in B 
C)  2.8 percent in A and 6.7 percent in B 
D)  2.8 percent in A and 5.2 percent in B

Question 13

What is the basket of goods used to construct the CPI?

Accepted Answer

A)  a random sample of all goods and services produced in the economy 
B)  the goods and services typically bought by consumers, according to Statistics Canada surveys 
C)  goods and services weighted by the ratio of expenditures on them relative to the consumption component of GDP 
D)  the average price of goods and services in each major category of consumer expenditures 
A)  a random sample of all goods and services produced in the economy 
B)  the goods and services typically bought by consumers, according to Statistics Canada surveys 
C)  goods and services weighted by the ratio of expenditures on them relative to the consumption component of GDP 
D)  the average price of goods and services in each major category of consumer expenditures

Question 14

Jake loaned Elwood $6000 for one year at a nominal interest rate of 12 percent. After Elwood repaid the loan in full, Jake complained that he could buy 5 percent fewer goods with the money Elwood gave him than he could before he loaned Elwood the $6000. What was the rate of inflation during the year?

Accepted Answer

A)  2.5 percent 
B)  7.0 percent 
C)  8.0 percent 
D)  17.0 percent 
A)  2.5 percent 
B)  7.0 percent 
C)  8.0 percent 
D)  17.0 percent

Question 15

Compute how much each of the following is worth in terms of today's dollars using 197 as the price index for today.
a. In 1936, the CPI was 17.7 and the price of a movie ticket was $0.25
b. In 1942, the CPI was 13.1 and a cook earned $15.00 a week
c. In 1953, the CPI was 17.4 and a litre of gas cost $0.06

Accepted Answer

a. The movie ticket is worth $0.25 × 197

Question 16

Which situation is described by the term "inflation"?

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)  Nominal interest rates in the economy are rising. 
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)  Nominal interest rates in the economy are rising.

Question 17

Which price changes when an inflation rate is calculated using the CPI?

Accepted Answer

A)  all prices 
B)  the prices of all final goods and services 
C)  the prices of all consumer goods 
D)  the prices of some consumer goods 
A)  all prices 
B)  the prices of all final goods and services 
C)  the prices of all consumer goods 
D)  the prices of some consumer goods

Question 18

Why does the GDP deflator give a different rate of inflation than the CPI does?

Accepted Answer

The GDP deflator and the CPI differ in t

Question 19

If the prices of New Zealand wool blankets imported into Canada increase, what happens to the GDP deflator and the CPI?

Accepted Answer

A)  The GDP deflator does not change; the CPI decreases. 
B)  The GDP deflator decreases; the CPI increases. 
C)  The GDP deflator and the CPI decrease. 
D)  The GDP deflator does not change; the CPI increases. 
A)  The GDP deflator does not change; the CPI decreases. 
B)  The GDP deflator decreases; the CPI increases. 
C)  The GDP deflator and the CPI decrease. 
D)  The GDP deflator does not change; the CPI increases.

Question 20

Which change in the price index shows the greatest rate of inflation?

Accepted Answer

A)  80 to 100 
B)  100 to 120 
C)  150 to 170 
D)  200 to 220 
A)  80 to 100 
B)  100 to 120 
C)  150 to 170 
D)  200 to 220

When the relative price of a good increases, how will consumers respond?

For the average Canadian consumer, what percentage of total consumption does shelter and food expenditures make up, respectively?

The Canadian income tax system is indexed to the CPI.

Which change in the price index shows the greatest rate of inflation?

In Canada, if the price of imported oil rises so that the price of gasoline and heating oil rise, what happens to the GDP deflator and the consumer price index?

The inflation rate is computed as 100 × (the current year CPI - the CPI of the previous year) ÷ the CPI of the previous year.

How often does the basket of goods in the consumer price index change?

Suppose that dairy products have risen in price less than prices in general over the past several years. Which problem in the construction of the CPI is this price increase most relevant to?

Which statement best describes the evolution of the GDP deflator and the consumer price index over the past decades?

The 2019 CPI was 225 and the 1982 CPI was 96.5. How much would you need in 2019 in order to buy what you were able to buy with the $1000 in 1982?

If the current-year CPI is 140, then, since the base year, the price level has increased 40 percent.

From October 2018 to October 2019, the CPI in country A rose from 116.5 to 119.8. In country B, it rose from 97.2 to 102.3. What were the inflation rates in the two countries?

What is the basket of goods used to construct the CPI?

Which situation is described by the term "inflation"?

Which price changes when an inflation rate is calculated using the CPI?

Why does the GDP deflator give a different rate of inflation than the CPI does?

If the prices of New Zealand wool blankets imported into Canada increase, what happens to the GDP deflator and the CPI?

Which change in the price index shows the greatest rate of inflation?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary Policy on Aggregate Demand

The Influence of Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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Exam 6: Measuring the Cost of Living

When the relative price of a good increases, how will consumers respond?

For the average Canadian consumer, what percentage of total consumption does shelter and food expenditures make up, respectively?

The Canadian income tax system is indexed to the CPI.

Which change in the price index shows the greatest rate of inflation?

In Canada, if the price of imported oil rises so that the price of gasoline and heating oil rise, what happens to the GDP deflator and the consumer price index?

The inflation rate is computed as 100 × (the current year CPI - the CPI of the previous year) ÷ the CPI of the previous year.

How often does the basket of goods in the consumer price index change?

Suppose that dairy products have risen in price less than prices in general over the past several years. Which problem in the construction of the CPI is this price increase most relevant to?

Which statement best describes the evolution of the GDP deflator and the consumer price index over the past decades?

The 2019 CPI was 225 and the 1982 CPI was 96.5. How much would you need in 2019 in order to buy what you were able to buy with the $1000 in 1982?

If the current-year CPI is 140, then, since the base year, the price level has increased 40 percent.

From October 2018 to October 2019, the CPI in country A rose from 116.5 to 119.8. In country B, it rose from 97.2 to 102.3. What were the inflation rates in the two countries?

What is the basket of goods used to construct the CPI?

Which situation is described by the term "inflation"?

Which price changes when an inflation rate is calculated using the CPI?

Why does the GDP deflator give a different rate of inflation than the CPI does?

If the prices of New Zealand wool blankets imported into Canada increase, what happens to the GDP deflator and the CPI?

Which change in the price index shows the greatest rate of inflation?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary Policy on Aggregate Demand

The Influence of Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters