Question 1

A reduction in the rate of inflation is called:

Accepted Answer

A)  deflation. 
B)  disinflation. 
C)  hyperinflation. 
D)  cost-push inflation. 
A)  deflation. 
B)  disinflation. 
C)  hyperinflation. 
D)  cost-push inflation.

Question 2

Suppose a market basket of goods and services costs $400 in the base year and the consumer price index (CPI) is currently 125. This indicates the price of the market basket of goods is now:

Accepted Answer

A)  $275. 
B)  $425. 
C)  $500. 
D)  $525. 
A)  $275. 
B)  $425. 
C)  $500. 
D)  $525.

Question 3

If the consumer price index (CPI) in Year X was 300 and the CPI in Year Y was 325, the rate of inflation for Year Y was:

Accepted Answer

A)  325 percent. 
B)  25 percent. 
C)  5 percent. 
D)  8 percent. 
A)  325 percent. 
B)  25 percent. 
C)  5 percent. 
D)  8 percent.

Question 4

Real income is the purchasing power of nominal (money) income.

Accepted Answer

A) True 
 B)False

Question 5

If the quality of items improves over time, the CPI ________ inflation.​

Accepted Answer

A)  ​overstates 
B)  ​understates 
C)  ​equals 
D)  ​approximates 
A)  ​overstates 
B)  ​understates 
C)  ​equals 
D)  ​approximates

Question 6

The likely result of an economy operating at full employment is:

Accepted Answer

A)  cost-push inflation. 
B)  demand-pull inflation. 
C)  a lower rate of growth. 
D)  hyperinflation. 
A)  cost-push inflation. 
B)  demand-pull inflation. 
C)  a lower rate of growth. 
D)  hyperinflation.

Question 7

Suppose a market basket of goods and services costs $1,000 in the base year and the consumer price index (CPI) is currently 110. This indicates the price of the market basket of goods and services is now:

Accepted Answer

A)  $110. 
B)  $1,000. 
C)  $1,100. 
D)  $1,225. 
A)  $110. 
B)  $1,000. 
C)  $1,100. 
D)  $1,225.

Question 8

During periods of inflation, the general price level of goods and services in the economy rises.

Accepted Answer

A) True 
 B)False

Question 9

Deflation refers to a:

Accepted Answer

A)  decreasing relative prices. 
B)  decreasing price level. 
C)  slowing down of the rate of inflation. 
D)  federal government policy of running budget surpluses. 
A)  decreasing relative prices. 
B)  decreasing price level. 
C)  slowing down of the rate of inflation. 
D)  federal government policy of running budget surpluses.

Question 10

A consumer price index of 110 for a given year indicates that prices in that year are 10 percent higher than prices in the base year.

Accepted Answer

A) True 
 B)False

Question 11

One way the consumer price index (CPI) differs from the GDP chain price index is that it:

Accepted Answer

A)  includes only purchases of items bought by typical urban consumers. 
B)  uses only current year quantities. 
C)  is based on all final goods and services. 
D)  includes only services. 
A)  includes only purchases of items bought by typical urban consumers. 
B)  uses only current year quantities. 
C)  is based on all final goods and services. 
D)  includes only services.

A reduction in the rate of inflation is called:

Suppose a market basket of goods and services costs $400 in the base year and the consumer price index (CPI) is currently 125. This indicates the price of the market basket of goods is now:

If the consumer price index (CPI) in Year X was 300 and the CPI in Year Y was 325, the rate of inflation for Year Y was:

Real income is the purchasing power of nominal (money) income.

If the quality of items improves over time, the CPI ________ inflation.

The likely result of an economy operating at full employment is:

Suppose a market basket of goods and services costs $1,000 in the base year and the consumer price index (CPI) is currently 110. This indicates the price of the market basket of goods and services is now:

During periods of inflation, the general price level of goods and services in the economy rises.

Deflation refers to a:

A consumer price index of 110 for a given year indicates that prices in that year are 10 percent higher than prices in the base year.

One way the consumer price index (CPI) differs from the GDP chain price index is that it:

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets and Income Distribution

Gross Domestic Product

Business Cycles and Unemployment

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits, Surpluses, and the National Debt

Money and the Federal Reserve System

Money Creation

Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

Filters

Exam 13: Inflation

A reduction in the rate of inflation is called:

Suppose a market basket of goods and services costs $400 in the base year and the consumer price index (CPI) is currently 125. This indicates the price of the market basket of goods is now:

If the consumer price index (CPI) in Year X was 300 and the CPI in Year Y was 325, the rate of inflation for Year Y was:

Real income is the purchasing power of nominal (money) income.

If the quality of items improves over time, the CPI ________ inflation.​

The likely result of an economy operating at full employment is:

Suppose a market basket of goods and services costs $1,000 in the base year and the consumer price index (CPI) is currently 110. This indicates the price of the market basket of goods and services is now:

During periods of inflation, the general price level of goods and services in the economy rises.

Deflation refers to a:

A consumer price index of 110 for a given year indicates that prices in that year are 10 percent higher than prices in the base year.

One way the consumer price index (CPI) differs from the GDP chain price index is that it:

Introducing the Economic Way of Thinking

Production Possibilities, Opportunity Cost, and Economic Growth

Market Demand and Supply

Markets in Action

Price Elasticity of Demand

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets and Income Distribution

Gross Domestic Product

Business Cycles and Unemployment

Aggregate Demand and Supply

Fiscal Policy

The Public Sector

Federal Deficits, Surpluses, and the National Debt

Money and the Federal Reserve System

Money Creation

Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

Filters

If the quality of items improves over time, the CPI ________ inflation.