Question 1

When the consumer price index falls, the typical family has to spend fewer dollars to maintain the same standard of living.

Accepted Answer

A) True 
 B)False

Question 2

Table 24-4
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 24-4. If 2012 is the base year, then the consumer price index was

Accepted Answer

A) 100 in 2012, 123.8 in 2013, and 133.3 in 2014. 
B) 100 in 2012, 124.2 in 2013, and 133.3 in 2014. 
C) 210 in 2012, 260 in 2013, and 280 in 2014. 
D) 100 in 2012, 150 in 2013, and 170 in 2014. 
A) 100 in 2012, 123.8 in 2013, and 133.3 in 2014. 
B) 100 in 2012, 124.2 in 2013, and 133.3 in 2014. 
C) 210 in 2012, 260 in 2013, and 280 in 2014. 
D) 100 in 2012, 150 in 2013, and 170 in 2014.

Question 3

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. 
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.

Question 4

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 5

Suppose the quality of televisions changes over time, but the quality change goes unmeasured for the purpose of computing the consumer price index. In which of the following instances would the bias resulting from the unmeasured quality change be most severe?

Accepted Answer

A) The quality of televisions deteriorates and televisions become more expensive relative to other goods. 
B) The quality of televisions improves and televisions become less expensive relative to other goods. 
C) The quality of televisions improves and televisions become more expensive relative to other goods. 
D) The quality of televisions deteriorates and the price of televisions relative to other prices remains unchanged. 
A) The quality of televisions deteriorates and televisions become more expensive relative to other goods. 
B) The quality of televisions improves and televisions become less expensive relative to other goods. 
C) The quality of televisions improves and televisions become more expensive relative to other goods. 
D) The quality of televisions deteriorates and the price of televisions relative to other prices remains unchanged.

Question 6

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. If the base year is 2009, then the consumer price index is

Accepted Answer

A) 100 in 2009, 109 in 2010, and 115 in 2011. 
B) 100 in 2009, 110 in 2010, and 117 in 2011. 
C) 110 in 2009, 121 in 2010, and 128.26 in 2011. 
D) 44 in 2009, 48.4 in 2010, and 51.48 in 2011. 
A) 100 in 2009, 109 in 2010, and 115 in 2011. 
B) 100 in 2009, 110 in 2010, and 117 in 2011. 
C) 110 in 2009, 121 in 2010, and 128.26 in 2011. 
D) 44 in 2009, 48.4 in 2010, and 51.48 in 2011.

Question 7

If the inflation rate decreased from 3.33% to 2.90% between October and November, while the nominal interest rate increased from 4.75% to 4.80%, what is the real interest rate in November?

Accepted Answer

The answer of If the inflation rate decreased from 3.33%...

Question 8

​Table 24-16
​
The following table shows the value of the Consumer Price Index and the nominal interest rate for 2013-2015.
​   ​
-Refer to Table 24-16. What was the real interest rate in 2014?​

Accepted Answer

A) ​-1.2% 
B) ​0.9% 
C) ​4.1% 
D) ​6.2% 
A) ​-1.2% 
B) ​0.9% 
C) ​4.1% 
D) ​6.2%

Question 9

The purpose of measuring the overall level of prices in the economy is to permit comparison between dollar figures from different times.

Accepted Answer

A) True 
 B)False

Question 10

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. 
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.

Question 11

Scenario 24-2
The price tag on a golf ball in 1975 read $0.20, and the price tag on a golf ball in 2005 read $2.00. The CPI in 1975 was 52.3, and the CPI in 2005 was 191.3.
-Refer to Scenario 24-2. The price of a 1975 golf ball in 2005 dollars is

Accepted Answer

A) $0.05. 
B) $0.53. 
C) $0.73. 
D) $2.00. 
A) $0.05. 
B) $0.53. 
C) $0.73. 
D) $2.00.

Question 12

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

Accepted Answer

The GDP deflator and the CPI differ in t

Question 13

During periods of deflation, the nominal interest rate will be​

Accepted Answer

A) ​higher than the real interest rate. 
B) ​lower than the real interest rate. 
C) ​the same as the real interest rate. 
D) ​possibly higher, lower, or the same as the real interest rate. The answer depends on how much deflation there is in the economy. 
A) ​higher than the real interest rate. 
B) ​lower than the real interest rate. 
C) ​the same as the real interest rate. 
D) ​possibly higher, lower, or the same as the real interest rate. The answer depends on how much deflation there is in the economy.

Question 14

Table 24-5
The table below pertains to Wrexington, an economy in which the typical consumer's basket consists of 20 pounds of meat and 10 toys.  
-Refer to Table 24-5. The cost of the basket in 2006 was

Accepted Answer

A) $9. 
B) $130. 
C) $140. 
D) $270. 
A) $9. 
B) $130. 
C) $140. 
D) $270.

Question 15

In the basket of goods that is used to compute the consumer price index, which of the following categories of consumer spending is the smallest?

Accepted Answer

A) food & beverages 
B) recreation 
C) housing 
D) apparel 
A) food & beverages 
B) recreation 
C) housing 
D) apparel

Question 16

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. 
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.

Question 17

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 2010, then the economy's inflation rate in 2010 was

Accepted Answer

A) 10.5 percent. 
B) 15.0 percent. 
C) 20.0 percent. 
D) 25.00 percent. 
A) 10.5 percent. 
B) 15.0 percent. 
C) 20.0 percent. 
D) 25.00 percent.

Question 18

Assume an economy experienced a positive rate of inflation between 2003 and 2004 and again between 2004 and 2005. However, the inflation rate was higher between 2004 and 2005 than it was between 2003 and 2004. Which of the following scenarios is consistent with this assumption?

Accepted Answer

A) The CPI was 100 in 2003, 110 in 2004, and 105 in 2005. 
B) The CPI was 100 in 2003, 120 in 2004, and 135 in 2005. 
C) The CPI was 100 in 2003, 105 in 2004, and 130 in 2005. 
D) The CPI was 100 in 2003, 90 in 2004, and 88 in 2005. 
A) The CPI was 100 in 2003, 110 in 2004, and 105 in 2005. 
B) The CPI was 100 in 2003, 120 in 2004, and 135 in 2005. 
C) The CPI was 100 in 2003, 105 in 2004, and 130 in 2005. 
D) The CPI was 100 in 2003, 90 in 2004, and 88 in 2005.

Question 19

When the consumer price index is computed, the base year is always the first year among the years being considered.

Accepted Answer

A) True 
 B)False

Question 20

Table 24-15
TOPICS:
Price levels
Inflation
KEYWORDS:
BLOOM'S: Application
CUSTOM ID:
022.24 - SAE - MANK08
Table 24-16
The table below lists annual consumer price index and inflation rates for a country over the period 2010-2013. Assume the year 2010 is used as the base year.  
-Refer to Table 24-16. Calculate the missing value that belongs in space A.

Accepted Answer

The answer of Table 24-15
TOPICS:
Price levels
Inflation
KEYWORDS:
BLOOM'S: Application
CUSTOM ID:
022.24 - SAE...

Exam 24: Measuring the Cost of Living

When the consumer price index falls, the typical family has to spend fewer dollars to maintain the same standard of living.

Table 24-4 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 24-4. If 2012 is the base year, then the consumer price index was

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."

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

Suppose the quality of televisions changes over time, but the quality change goes unmeasured for the purpose of computing the consumer price index. In which of the following instances would the bias resulting from the unmeasured quality change be most severe?

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. If the base year is 2009, then the consumer price index is

If the inflation rate decreased from 3.33% to 2.90% between October and November, while the nominal interest rate increased from 4.75% to 4.80%, what is the real interest rate in November?

​Table 24-16 ​ The following table shows the value of the Consumer Price Index and the nominal interest rate for 2013-2015. ​ ​ -Refer to Table 24-16. What was the real interest rate in 2014?​

The purpose of measuring the overall level of prices in the economy is to permit comparison between dollar figures from different times.

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

Scenario 24-2 The price tag on a golf ball in 1975 read $0.20, and the price tag on a golf ball in 2005 read $2.00. The CPI in 1975 was 52.3, and the CPI in 2005 was 191.3. -Refer to Scenario 24-2. The price of a 1975 golf ball in 2005 dollars is

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

During periods of deflation, the nominal interest rate will be​

Table 24-5 The table below pertains to Wrexington, an economy in which the typical consumer's basket consists of 20 pounds of meat and 10 toys. -Refer to Table 24-5. The cost of the basket in 2006 was

In the basket of goods that is used to compute the consumer price index, which of the following categories of consumer spending is the smallest?

The term inflation is used to describe a situation in which

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 2010, then the economy's inflation rate in 2010 was

Assume an economy experienced a positive rate of inflation between 2003 and 2004 and again between 2004 and 2005. However, the inflation rate was higher between 2004 and 2005 than it was between 2003 and 2004. Which of the following scenarios is consistent with this assumption?

When the consumer price index is computed, the base year is always the first year among the years being considered.

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Applications: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers in Microeconomics

Measuring a Nation S Income

Production and Growth

Saving, Investment, and the Financial System

Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters

Table 24-16 The following table shows the value of the Consumer Price Index and the nominal interest rate for 2013-2015. -Refer to Table 24-16. What was the real interest rate in 2014?

During periods of deflation, the nominal interest rate will be