Question 1

Nominal and real wage rates

Accepted Answer

A)  must always change by the same amount. 
B)  must always change in opposite directions by the same amount. 
C)  must always change in the same direction but could change by different amounts. 
D)  could change in opposite directions. 
E)  must always change in the same direction and the nominal wage rate must change more rapidly than the real wage rate. 
A)  must always change by the same amount. 
B)  must always change in opposite directions by the same amount. 
C)  must always change in the same direction but could change by different amounts. 
D)  could change in opposite directions. 
E)  must always change in the same direction and the nominal wage rate must change more rapidly than the real wage rate.

Question 2

The CPI for 2010 was 121 and for 2011 was 132.What was the inflation rate between 2010 and 2011?

Accepted Answer

A)  9.09 percent 
B)  11 percent 
C)  10 percent 
D)  8.3 percent 
E)  121.0 percent 
A)  9.09 percent 
B)  11 percent 
C)  10 percent 
D)  8.3 percent 
E)  121.0 percent

Question 3

$$\begin{array} { l c c } 
 { \text { GDP } } & \begin{array} { c } 
\text { Data for 2008 } \
\text { (billions of dollars) }
\end{array} & \begin{array} { c } 
\text { Data for 2009 } \
\text { (billions of dollars) }
\end{array} \
\hline \text { Nominal GDP } & 3,300 & 4,200 \
\text { Real GDP } & 3,300 & 3,600 \
\hline
\end{array}$$
-The table above shows real and nominal GDP for two years.
a. What does the GDP price index equal in 2008?
 What does the value of the GDP price index tell you about 2008?
b. What does the GDP price index equal in 2009?

Accepted Answer

a. The GDP price index equals (100) × (n

Question 4

$$\begin{array} { c c } 
\text { Year } & \text { CPI } \
\hline 1994 & 90.0 \
1996 & 95.5 \
1998 - 2000 & 100.0 \
2002 & 104.0
\end{array}$$
-To find the cost of the CPI market basket in the current period we have to multiply the

Accepted Answer

A)  quantities in the CPI market basket by the base period prices. 
B)  quantities in the CPI market basket by the current period prices. 
C)  current period quantities in the CPI market basket by the base period prices. 
D)  current period quantities in the CPI market basket by the current period prices. 
E)  quantities in the CPI market basket by the base period prices and then multiply by 100. 
A)  quantities in the CPI market basket by the base period prices. 
B)  quantities in the CPI market basket by the current period prices. 
C)  current period quantities in the CPI market basket by the base period prices. 
D)  current period quantities in the CPI market basket by the current period prices. 
E)  quantities in the CPI market basket by the base period prices and then multiply by 100.

Question 5

In the current year, the CPI is 122 and during the previous year the CPI was 115.The inflation rate between these years is

Accepted Answer

A)  5.7 percent. 
B)  6.1 percent. 
C)  -5.7 percent. 
D)  -6.1 percent. 
E)  1.61 percent. 
A)  5.7 percent. 
B)  6.1 percent. 
C)  -5.7 percent. 
D)  -6.1 percent. 
E)  1.61 percent.

Question 6

Your starting salary is $35,000 per year.After one year, you are given a raise that increases your nominal salary.Which of the following salaries would you prefer the most?

Accepted Answer

A)  a $36,000 salary with a CPI of 103.0 
B)  a $38,000 salary with a CPI of 104.0 
C)  a $39,000 salary with a CPI of 109.0 
D)  a $39,000 salary with a CPI of 110.0 
E)  a $37,000 salary with a CPI of 106.0 
A)  a $36,000 salary with a CPI of 103.0 
B)  a $38,000 salary with a CPI of 104.0 
C)  a $39,000 salary with a CPI of 109.0 
D)  a $39,000 salary with a CPI of 110.0 
E)  a $37,000 salary with a CPI of 106.0

Question 7

When the nominal price of a good increases over time, the real cost of buying the good

Accepted Answer

A)  must increase. 
B)  decreases because income also increases over time. 
C)  does not change because income also increases over time. 
D)  might increase, decrease, or stay the same depending on how much the CPI changed. 
E)  might increase, decrease, or stay the same depending on how much income changed. 
A)  must increase. 
B)  decreases because income also increases over time. 
C)  does not change because income also increases over time. 
D)  might increase, decrease, or stay the same depending on how much the CPI changed. 
E)  might increase, decrease, or stay the same depending on how much income changed.

Question 8

Since 1984, the

Accepted Answer

A)  real wage rate increased steadily. 
B)  nominal wage rate increased and the real wage rate did not change by very much. 
C)  real wage rate increased more than the nominal wage rate. 
D)  nominal wage rate increased at an uneven pace whereas the increase in the real wage rate was steady and constant. 
E)  nominal wage rate and real wage rate both decreased. 
A)  real wage rate increased steadily. 
B)  nominal wage rate increased and the real wage rate did not change by very much. 
C)  real wage rate increased more than the nominal wage rate. 
D)  nominal wage rate increased at an uneven pace whereas the increase in the real wage rate was steady and constant. 
E)  nominal wage rate and real wage rate both decreased.

Question 9

In the United States in 2009, suppose nominal GDP was $14 billion and real GDP was $12 billion.The GDP price index in 2009 was ________.

Accepted Answer

A)  1.17 
B)  116.7 
C)  142.8 
D)  14.3 
E)  168 
A)  1.17 
B)  116.7 
C)  142.8 
D)  14.3 
E)  168

Question 10

Your wage this year is $15 per hour and the CPI is 178.Next year you get a raise to $17 and the CPI rises to 185.What has happened?

Accepted Answer

A)  Your real wage has increased but by a smaller percentage than your nominal wage. 
B)  Your nominal wage has increased but your real wage has declined. 
C)  Your real wage rate has increased by a larger percentage than your nominal wage. 
D)  Your real and nominal wages have each increased by the same percentage. 
E)  Your nominal wage has increased but your real wage has not changed. 
A)  Your real wage has increased but by a smaller percentage than your nominal wage. 
B)  Your nominal wage has increased but your real wage has declined. 
C)  Your real wage rate has increased by a larger percentage than your nominal wage. 
D)  Your real and nominal wages have each increased by the same percentage. 
E)  Your nominal wage has increased but your real wage has not changed.

Question 11

The CPI stands for

Accepted Answer

A)  Citizens Paying Index. 
B)  Corporate Placing Index. 
C)  Consumer Paying Index. 
D)  Consumer Price Index. 
E)  Corporate/Consumer Payment Index. 
A)  Citizens Paying Index. 
B)  Corporate Placing Index. 
C)  Consumer Paying Index. 
D)  Consumer Price Index. 
E)  Corporate/Consumer Payment Index.

Question 12

Chloe has a $15,000 personal loan at a nominal interest rate of 8 percent.If the inflation rate is 3 percent what is the real interest rate paid on the loan?

Accepted Answer

A)  8 percent 
B)  5 percent 
C)  11 percent 
D)  3 percent 
E)  2.67 percent 
A)  8 percent 
B)  5 percent 
C)  11 percent 
D)  3 percent 
E)  2.67 percent

Question 13

Which of the following statements about the nominal and the real wage rates is correct?

Accepted Answer

A)  The nominal wage rate equals the real wage rate divided by the CPI and then multiplied by 100. 
B)  The nominal wage rate is measured in the dollars of a base year. 
C)  The real wage rate is measured in current year dollars. 
D)  The real wage rate indicates how many goods and services can be purchased with an hour's labor. 
E)  The real wage rate equals the nominal wage rate multiplied by the CPI then divided by 100. 
A)  The nominal wage rate equals the real wage rate divided by the CPI and then multiplied by 100. 
B)  The nominal wage rate is measured in the dollars of a base year. 
C)  The real wage rate is measured in current year dollars. 
D)  The real wage rate indicates how many goods and services can be purchased with an hour's labor. 
E)  The real wage rate equals the nominal wage rate multiplied by the CPI then divided by 100.

Question 14

Define the nominal wage rate and the real wage rate.Can the nominal wage rate increase faster than the real wage rate?

Accepted Answer

The nominal wage rate is the wage rate m

Question 15

Which of the following makes the Consumer Price Index a less accurate measure of the cost of living?
i. the monthly price survey conducted to collect information about prices is very unreliable
ii. the existence of a new goods bias in the calculation of the CPi
iii. the existence of a quality change bias in the calculation of the CPI

Accepted Answer

A)  i only 
B)  ii only 
C)  ii and iii 
D)  i and ii 
E)  i, ii, and iii 
A)  i only 
B)  ii only 
C)  ii and iii 
D)  i and ii 
E)  i, ii, and iii

Question 16

$$\begin{array} { c c c c } 
\text { Item } & \begin{array} { c } 
\text { Quantity } \
( 2009 )
\end{array} & \begin{array} { c } 
\text { Price } \
( 2009 )
\end{array} & \begin{array} { c } 
\text { Price } \
( 2010 )
\end{array} \
\hline \text { Salt } & 2 & \$ 1.00 & \$ 2.00 \
\text { Bread } & 20 & \$ 2.50 & \$ 3.00 \
\hline
\end{array}$$
-The data in the table above shows the consumption by families in a small (poor) economy.The families consume only salt and bread.The reference base period is 2009.The CPI in 2010 is

Accepted Answer

A)  100. 
B)  118.8 
C)  123.1 
D)  23.1 
E)  18.8 
A)  100. 
B)  118.8 
C)  123.1 
D)  23.1 
E)  18.8

Question 17

If your real income falls during a period of inflation, then your nominal income might have

Accepted Answer

A)  increased more rapidly than the price level. 
B)  increased at the same rate as the price level. 
C)  increased more slowly than the price level. 
D)  decreased more slowly than the price level. 
E)  More information is needed to determine if your nominal income increased more slowly, more rapidly, or at the same rate as the price level. 
A)  increased more rapidly than the price level. 
B)  increased at the same rate as the price level. 
C)  increased more slowly than the price level. 
D)  decreased more slowly than the price level. 
E)  More information is needed to determine if your nominal income increased more slowly, more rapidly, or at the same rate as the price level.

Question 18

The CPI is reported once every

Accepted Answer

A)  year. 
B)  quarter. 
C)  month. 
D)  week. 
E)  other year. 
A)  year. 
B)  quarter. 
C)  month. 
D)  week. 
E)  other year.

Question 19

$$\begin{array} { | l | c | c | c | c | } 
\hline \text { Item } & \begin{array} { c } 
\text { Quantity } \
( 2009 )
\end{array} & \text { Price (2009) } & \begin{array} { c } 
\text { Quantity } \
( 2010 )
\end{array} & \text { Price (2010) } \
\hline \text { Magazines } & 400 & \$ 5.00 & 450 & \$ 4.50 \
\hline \text { Movie tickets } & 50 & \$ 6.00 & 200 & \$ 8.00 \
\hline \text { Pizzas } & 100 & \$ 10.00 & 120 & \$ 10.50 \
\hline
\end{array}$$ 
The data in the table above shows the consumption by families in an economy.The year 2009 is the reference base period.
-Based on the table above, the CPI for 2010 is

Accepted Answer

A)  98.5. 
B)  105.1. 
C)  102.5. 
D)  5.0 percent. 
E)  100. 
A)  98.5. 
B)  105.1. 
C)  102.5. 
D)  5.0 percent. 
E)  100.

Question 20

The CPI was 170 last year and is 190 this year.What is the inflation rate between these two years?

Accepted Answer

A)  10.5 percent 
B)  20 percent 
C)  11.8 percent 
D)  18 percent 
E)  15.0 percent 
A)  10.5 percent 
B)  20 percent 
C)  11.8 percent 
D)  18 percent 
E)  15.0 percent

Nominal and real wage rates

The CPI for 2010 was 121 and for 2011 was 132.What was the inflation rate between 2010 and 2011?

Year CPI 1994 90.0 1996 95.5 1998-2000 100.0 2002 104.0 -To find the cost of the CPI market basket in the current period we have to multiply the

In the current year, the CPI is 122 and during the previous year the CPI was 115.The inflation rate between these years is

Your starting salary is $35,000 per year.After one year, you are given a raise that increases your nominal salary.Which of the following salaries would you prefer the most?

When the nominal price of a good increases over time, the real cost of buying the good

Since 1984, the

In the United States in 2009, suppose nominal GDP was $14 billion and real GDP was $12 billion.The GDP price index in 2009 was ________.

Your wage this year is $15 per hour and the CPI is 178.Next year you get a raise to $17 and the CPI rises to 185.What has happened?

The CPI stands for

Chloe has a $15,000 personal loan at a nominal interest rate of 8 percent.If the inflation rate is 3 percent what is the real interest rate paid on the loan?

Which of the following statements about the nominal and the real wage rates is correct?

Define the nominal wage rate and the real wage rate.Can the nominal wage rate increase faster than the real wage rate?

Item Quantity (2009) Price (2009) Price (2010) Salt 2 \ 1.00 \ 2.00 Bread 20 \ 2.50 \ 3.00 -The data in the table above shows the consumption by families in a small (poor) economy.The families consume only salt and bread.The reference base period is 2009.The CPI in 2010 is

If your real income falls during a period of inflation, then your nominal income might have

The CPI is reported once every

The CPI was 170 last year and is 190 this year.What is the inflation rate between these two years?

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

Potential Gdp and the Natural Unemployment Rate

Economic Growth

Finance, Saving, and Investment

The Monetary System

Money, Interest, and Inflation

Aggregate Supply and Aggregate Demand

Aggregate Expenditure Multiplier

The Short-Run Policy Tradeoff

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters

Exam 7: The Cpi and the Cost of Living

Nominal and real wage rates

The CPI for 2010 was 121 and for 2011 was 132.What was the inflation rate between 2010 and 2011?

Year CPI 1994 90.0 1996 95.5 1998-2000 100.0 2002 104.0 -To find the cost of the CPI market basket in the current period we have to multiply the

In the current year, the CPI is 122 and during the previous year the CPI was 115.The inflation rate between these years is

Your starting salary is $35,000 per year.After one year, you are given a raise that increases your nominal salary.Which of the following salaries would you prefer the most?

When the nominal price of a good increases over time, the real cost of buying the good

Since 1984, the

In the United States in 2009, suppose nominal GDP was $14 billion and real GDP was $12 billion.The GDP price index in 2009 was ________.

Your wage this year is $15 per hour and the CPI is 178.Next year you get a raise to $17 and the CPI rises to 185.What has happened?

The CPI stands for

Chloe has a $15,000 personal loan at a nominal interest rate of 8 percent.If the inflation rate is 3 percent what is the real interest rate paid on the loan?

Which of the following statements about the nominal and the real wage rates is correct?

Define the nominal wage rate and the real wage rate.Can the nominal wage rate increase faster than the real wage rate?

Item Quantity (2009) Price (2009) Price (2010) Salt 2 \ 1.00 \ 2.00 Bread 20 \ 2.50 \ 3.00 -The data in the table above shows the consumption by families in a small (poor) economy.The families consume only salt and bread.The reference base period is 2009.The CPI in 2010 is

If your real income falls during a period of inflation, then your nominal income might have

The CPI is reported once every

The CPI was 170 last year and is 190 this year.What is the inflation rate between these two years?

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

Potential Gdp and the Natural Unemployment Rate

Economic Growth

Finance, Saving, and Investment

The Monetary System

Money, Interest, and Inflation

Aggregate Supply and Aggregate Demand

Aggregate Expenditure Multiplier

The Short-Run Policy Tradeoff

Fiscal Policy

Monetary Policy

International Trade Policy

International Finance

Filters