The table below lists the prices of chips and salsa for the months of October, November, and December. Assume that the typical consumer buys 8 bags of chips and 4 jars of salsa each month, and that October is the base period. $\begin{array} { | l | l | l | } \hline \text { Month } & \text { Price of Chips } & \text { Price of Salsa } \\ \hline \text { October } & \$ 2.50 & \$ 2.50 \\ \hline \text { November } & \$ 2.40 & \$ 2.55 \\ \hline \text { December } & \$ 2.60 & \$ 2.75 \\ \hline \end{array}$ -Refer to Table 24-6. Calculate the inflation rate for February.

The answer of The table below lists the prices of...

Table 24-2 The following table pertains to Wiskancia, an economy in which the typical consumer's basket consists of 15 pounds of apples and 7 teddy bears. \[\begin{array} { | c | c | c | } \hline \text { Year } & \begin{array} { c } \text { Price of Apples } \\ \text { (Dollars per pound) } \end{array} & \begin{array} { c } \text { Price of Teddy bears } \\ \text { (Dollars per toy) } \end{array} \\ \hline 1 & 14 & 7 \\ \hline 2 & 12 & 5 \\ \hline 3 & 15 & 9 \\ \hline \end{array}\] -Refer to Table 24-2. The cost of the basket

A) decreased from Year 1 to Year 2 and increased from Year 2 to Year 3. B) increased from Year 1 to Year 2 and decreased from Year 2 to Year 3. C) increased from Year 1 to Year 2 and increased from Year 2 to Year 3. D) decreased from Year 1 to Year 2 and decreased from Year 2 to Year 3. A) decreased from Year 1 to Year 2 and increased from Year 2 to Year 3. B) increased from Year 1 to Year 2 and decreased from Year 2 to Year 3. C) increased from Year 1 to Year 2 and increased from Year 2 to Year 3. D) decreased from Year 1 to Year 2 and decreased from Year 2 to Year 3.

Table 24-8 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. \[\begin{array} { | l | l | l | } \hline \text { Year } & \begin{array} { l } \text { Consumer } \\ \text { Price Index } \end{array} & \text { Inflation Rate } \\ \hline 2010 & 100 & \\ \hline 2011 & 120 & \mathrm {~B} \\ \hline 2012 & \mathrm {~A} & 15 \% \\ \hline 2013 & 134 & \mathrm { C } \\ \hline \end{array}\] -Refer to Table 24-8. Calculate the missing value that belongs in space C.

The answer of Table 24-8 The table below lists annual consumer...

Exam 24: Measuring the Cost of Living

The table below lists the prices of chips and salsa for the months of October, November, and December. Assume that the typical consumer buys 8 bags of chips and 4 jars of salsa each month, and that October is the base period. Month Price of Chips Price of Salsa October \ 2.50 \ 2.50 November \ 2.40 \ 2.55 December \ 2.60 \ 2.75 -Refer to Table 24-6. Calculate the inflation rate for February.

(Short Answer)

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Question 141

The real interest rate measures the change in dollar amounts.

(True/False)

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Question 142

If Year 1 is the base year and Year 2 is the following year, then the inflation rate in Year 2 equals

(Multiple Choice)

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Question 143

Table 24-2 The following table pertains to Wiskancia, an economy in which the typical consumer's basket consists of 15 pounds of apples and 7 teddy bears. Year Price of Apples (Dollars per pound) Price of Teddy bears (Dollars per toy) 1 14 7 2 12 5 3 15 9 -Refer to Table 24-2. The cost of the basket

(Multiple Choice)

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Question 144

Table 24-8 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. Year Consumer Price Index Inflation Rate 2010 100 2011 120 2012 15\% 2013 134 -Refer to Table 24-8. Calculate the missing value that belongs in space C.

(Short Answer)

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Question 145

The inflation rate is the absolute change in the price level from the previous period.

(True/False)

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Question 146

One of the widely acknowledged problems with using the consumer price index as a measure of the cost of living is that the CPI

(Multiple Choice)

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Question 147

If the price of Italian shoes imported into the United States increases, then

(Multiple Choice)

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Question 148

The CPI and GDP deflator usually tell two different stories about how quickly prices are rising.

(True/False)

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Question 149

Explain how the introduction of new goods might bias the calculation of the consumer price index.

(Essay)

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Question 150

When some dollar amount is automatically corrected for inflation by law or contract, the amount is said to be indexed for inflation.

(True/False)

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Question 151

The nominal interest rate tells you

(Multiple Choice)

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Question 152

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.

(True/False)

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Question 153

The table below lists the prices of chips and salsa for the months of October, November, and December. Assume that the typical consumer buys 8 bags of chips and 4 jars of salsa each month, and that October is the base period. Month Price of Chips Price of Salsa October \ 2.50 \ 2.50 November \ 2.40 \ 2.55 December \ 2.60 \ 2.75 -Refer to Table 24-6. Calculate the consumer price index for February and March.

(Short Answer)

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Question 154

Which of the following is correct?

(Multiple Choice)

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Question 155

If the nominal interest rate is 8.3% and the inflation rate is 4.4%, what is the real interest rate?

(Short Answer)

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Question 156

Table 24-4 Lee's expenditures on food for three consecutive years, along with other values, are presented in the following table. -Refer to Table 24-4. Suppose Will's Year 1 food expenditures in Year 3 dollars amounted to $9,590. Suppose also that the real interest rate in Year 3 was 6 percent. Then, in Year 3,

(Multiple Choice)

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Question 157

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

(True/False)

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Question 158

If the consumer price index is 120 in 2009 and 139.2 in 2010, then the rate of inflation for 2010 is 39.2 percent.

(True/False)

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Question 159

Substitution bias occurs because the CPI ignores the possibility of consumer substitution toward goods that have become relatively less expensive.

(True/False)

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Question 160

Exam 24: Measuring the Cost of Living

The real interest rate measures the change in dollar amounts.

If Year 1 is the base year and Year 2 is the following year, then the inflation rate in Year 2 equals

The inflation rate is the absolute change in the price level from the previous period.

One of the widely acknowledged problems with using the consumer price index as a measure of the cost of living is that the CPI

If the price of Italian shoes imported into the United States increases, then

The CPI and GDP deflator usually tell two different stories about how quickly prices are rising.

Explain how the introduction of new goods might bias the calculation of the consumer price index.

When some dollar amount is automatically corrected for inflation by law or contract, the amount is said to be indexed for inflation.

The nominal interest rate tells you

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.

Which of the following is correct?

If the nominal interest rate is 8.3% and the inflation rate is 4.4%, what is the real interest rate?

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

If the consumer price index is 120 in 2009 and 139.2 in 2010, then the rate of inflation for 2010 is 39.2 percent.

Substitution bias occurs because the CPI ignores the possibility of consumer substitution toward goods that have become relatively less expensive.

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 Nations 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

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