Question 1

The GDP deflator is

Accepted Answer

A)  a measure of the level of production. 
B)  always greater than 100. 
C)  the price level during the base year. 
D)  a measure of the price level. 
E)  equal to nominal GDP during the base year. 
A)  a measure of the level of production. 
B)  always greater than 100. 
C)  the price level during the base year. 
D)  a measure of the price level. 
E)  equal to nominal GDP during the base year.

Question 2

Suppose the CPI for the year 2010 is 133.7.This number means that

Accepted Answer

A)  on average, goods cost $133.70 each in the year 2010. 
B)  prices rose 33.7 percent over the last year. 
C)  prices rose 133.7 percent over the base year. 
D)  prices rose 33.7 percent over the base year. 
E)  prices rose 133.7 percent over the last year. 
A)  on average, goods cost $133.70 each in the year 2010. 
B)  prices rose 33.7 percent over the last year. 
C)  prices rose 133.7 percent over the base year. 
D)  prices rose 33.7 percent over the base year. 
E)  prices rose 133.7 percent over the last year.

Question 3

If the GDP price index is 125 and nominal GDP is $130 billion, then real GDP equals ________ billion.

Accepted Answer

A)  $104.00. 
B)  $162.50 
C)  $96 
D)  $1.04 
E)  $9.6 
A)  $104.00. 
B)  $162.50 
C)  $96 
D)  $1.04 
E)  $9.6

Question 4

If the real interest rate is 7 percent when the nominal interest is 12 rate is percent, the inflation rate is

Accepted Answer

A)  -5 percent. 
B)  5 percent. 
C)  19 percent. 
D)  1.7 percent. 
E)  7 percent. 
A)  -5 percent. 
B)  5 percent. 
C)  19 percent. 
D)  1.7 percent. 
E)  7 percent.

Question 5

Which of the following formulas would you use to calculate the nominal wage rate?

Accepted Answer

A)  nominal wage rate = real wage rate ÷ CPI 
B)  nominal wage rate = real wage rate × CPI 
C)  nominal wage rate = (real wage rate × CPI) ÷ 100 
D)  nominal wage rate = (real wage rate × CPI) × 100 
E)  nominal wage rate = (real wage rate ÷ CPI) × 100 
A)  nominal wage rate = real wage rate ÷ CPI 
B)  nominal wage rate = real wage rate × CPI 
C)  nominal wage rate = (real wage rate × CPI) ÷ 100 
D)  nominal wage rate = (real wage rate × CPI) × 100 
E)  nominal wage rate = (real wage rate ÷ CPI) × 100

Question 6

$$\begin{array} { c c c c } 
\text { Item } & \begin{array} { c } 
\text { Quantity } \
( 2009 )
\end{array} & \begin{array} { c } 
\text { Price } \
( 2009 )
\end{array} & \begin{array} { c } 
\text { Price } \
( 2010 )
\end{array} \
\hline \text { Salt } & 2 & \$ 1.00 & \$ 2.00 \
\text { Bread } & 20 & \$ 2.50 & \$ 3.00 \
\hline
\end{array}$$
-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 inflation rate between 2009 and 2010 is

Accepted Answer

A)  52.5 percent. 
B)  123.1 percent. 
C)  23.1 percent. 
D)  18.8 percent. 
E)  118.8 percent. 
A)  52.5 percent. 
B)  123.1 percent. 
C)  23.1 percent. 
D)  18.8 percent. 
E)  118.8 percent.

Question 7

The CPI bias was estimated by the Congressional Advisory Commission on the Consumer Price Index as

Accepted Answer

A)  understating the actual inflation rate by about 5 percentage points a year. 
B)  understating the actual inflation rate by more than 5 percentage points a year. 
C)  overstating the actual inflation rate by about 1 percentage point a year. 
D)  overstating the actual inflation rate by more than 5 percentage points a year. 
E)  understating the actual inflation rate by about 1 percentage point a year. 
A)  understating the actual inflation rate by about 5 percentage points a year. 
B)  understating the actual inflation rate by more than 5 percentage points a year. 
C)  overstating the actual inflation rate by about 1 percentage point a year. 
D)  overstating the actual inflation rate by more than 5 percentage points a year. 
E)  understating the actual inflation rate by about 1 percentage point a year.

Question 8

The Consumer Price Index is calculated by the

Accepted Answer

A)  Bureau of Labor Statistics. 
B)  Department of Labor. 
C)  Department of Commerce. 
D)  Federal Reserve Bank of New York. 
E)  Society for Consumer Protection. 
A)  Bureau of Labor Statistics. 
B)  Department of Labor. 
C)  Department of Commerce. 
D)  Federal Reserve Bank of New York. 
E)  Society for Consumer Protection.

Question 9

In the United States, the inflation rate since 1999 generally was

Accepted Answer

A)  higher than between 1979 to 1981. 
B)  higher than in the 1980s. 
C)  lower than between 1979 to 1981. 
D)  much higher than between 1985 to 1995. 
E)  negative. 
A)  higher than between 1979 to 1981. 
B)  higher than in the 1980s. 
C)  lower than between 1979 to 1981. 
D)  much higher than between 1985 to 1995. 
E)  negative.

Question 10

For the purpose of measuring the cost of living for consumers, one reason the GDP price index is NOT a good substitute for the CPI is because the GDP price index

Accepted Answer

A)  compares a current year basket of goods with a base year basket of goods. 
B)  compares current year's prices with base year's prices. 
C)  includes the prices of exported goods, which are not consumed in the United States. 
D)  and the CPI move in the same direction over time. 
E)  has a larger bias than does the CPI. 
A)  compares a current year basket of goods with a base year basket of goods. 
B)  compares current year's prices with base year's prices. 
C)  includes the prices of exported goods, which are not consumed in the United States. 
D)  and the CPI move in the same direction over time. 
E)  has a larger bias than does the CPI.

Question 11

Explain the difference between a nominal value and a real value.

Accepted Answer

A nominal value is the actual price that

Question 12

For the CPI, the market basket of good and services is modified

Accepted Answer

A)  each time the Consumer Expenditures Survey is conducted. 
B)  about every 10 to 20 years. 
C)  each month when the Price Survey is completed. 
D)  each year to reflect changes in consumer purchasing habits. 
E)  at the discretion of the President. 
A)  each time the Consumer Expenditures Survey is conducted. 
B)  about every 10 to 20 years. 
C)  each month when the Price Survey is completed. 
D)  each year to reflect changes in consumer purchasing habits. 
E)  at the discretion of the President.

Question 13

Consumers in Beachland consume only two goods, sodas and DVDs.If they spend $10 on sodas and $90 on DVDs a month, how many sodas and DVDs are in their CPI market basket if the price of a soda is $1 and the price of a DVD is $9.

Accepted Answer

A)  9 sodas and 1 DVD 
B)  1 soda and 9 DVDs 
C)  10 sodas and 9 DVDs 
D)  10 sodas and 10 DVDs 
E)  It is impossible to determine the market basket without information on the quantity of at least one of the two goods consumed. 
A)  9 sodas and 1 DVD 
B)  1 soda and 9 DVDs 
C)  10 sodas and 9 DVDs 
D)  10 sodas and 10 DVDs 
E)  It is impossible to determine the market basket without information on the quantity of at least one of the two goods consumed.

Question 14

If we compare the CPI to a perfect cost of living index, we find that they are

Accepted Answer

A)  the same thing. 
B)  different because the cost of living has nothing to do with prices. 
C)  different because the CPI does not measure prices. 
D)  different because the CPI uses a fixed basket and has some measurement difficulties. 
E)  not the same because the CPI has a fixed reference base period. 
A)  the same thing. 
B)  different because the cost of living has nothing to do with prices. 
C)  different because the CPI does not measure prices. 
D)  different because the CPI uses a fixed basket and has some measurement difficulties. 
E)  not the same because the CPI has a fixed reference base period.

Question 15

What, if any, is the impact of the CPI bias on government spending and taxes?

Accepted Answer

About one third of government outlays, s

Question 16

If a country had a CPI of 105.0 last year and a CPI of 102.0 this year, then

Accepted Answer

A)  the average prices of goods and services increased between last year and this year. 
B)  the average prices of goods and services decreased between last year and this year. 
C)  the average quality of goods and services decreased between last year and this year. 
D)  there was an error when calculating the CPI this year. 
E)  the quantity of consumer goods and services produced decreased between last year and this year. 
A)  the average prices of goods and services increased between last year and this year. 
B)  the average prices of goods and services decreased between last year and this year. 
C)  the average quality of goods and services decreased between last year and this year. 
D)  there was an error when calculating the CPI this year. 
E)  the quantity of consumer goods and services produced decreased between last year and this year.

Question 17

Explain the CPI bias and how it can distort private contracts and increase government outlays.

Accepted Answer

The CPI bias is the point that the CPI o

Question 18

Suppose Mack's wage was $7.00 an hour in 2001 and was $12.00 per hour in 2008.The CPI was 94 in 2001 and 201 in 2008.The 2001 wage in terms of 2008 dollars is

Accepted Answer

A)  $14.97. 
B)  $14.07. 
C)  $3.48. 
D)  $13.16. 
E)  $7.00 
A)  $14.97. 
B)  $14.07. 
C)  $3.48. 
D)  $13.16. 
E)  $7.00

Question 19

The CPI market basket is determined by

Accepted Answer

A)  tax return data of households. 
B)  supermarket purchases recorded by scanner technology. 
C)  profit releases of the largest companies. 
D)  a consumer survey. 
E)  surveys asking large retail companies, such as Walmart, about their sales of consumer goods and services. 
A)  tax return data of households. 
B)  supermarket purchases recorded by scanner technology. 
C)  profit releases of the largest companies. 
D)  a consumer survey. 
E)  surveys asking large retail companies, such as Walmart, about their sales of consumer goods and services.

Question 20

In 2006, the average starting salary for a history is $29,500.If the CPI was 147.5, the real salary is

Accepted Answer

A)  $200.00 an hour. 
B)  $20,000. 
C)  $35,000. 
D)  $43,513. 
E)  $14,750. 
A)  $200.00 an hour. 
B)  $20,000. 
C)  $35,000. 
D)  $43,513. 
E)  $14,750.

The GDP deflator is

Suppose the CPI for the year 2010 is 133.7.This number means that

If the GDP price index is 125 and nominal GDP is $130 billion, then real GDP equals ________ billion.

If the real interest rate is 7 percent when the nominal interest is 12 rate is percent, the inflation rate is

Which of the following formulas would you use to calculate the nominal 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 inflation rate between 2009 and 2010 is

The CPI bias was estimated by the Congressional Advisory Commission on the Consumer Price Index as

The Consumer Price Index is calculated by the

In the United States, the inflation rate since 1999 generally was

For the purpose of measuring the cost of living for consumers, one reason the GDP price index is NOT a good substitute for the CPI is because the GDP price index

Explain the difference between a nominal value and a real value.

For the CPI, the market basket of good and services is modified

Consumers in Beachland consume only two goods, sodas and DVDs.If they spend $10 on sodas and $90 on DVDs a month, how many sodas and DVDs are in their CPI market basket if the price of a soda is $1 and the price of a DVD is $9.

If we compare the CPI to a perfect cost of living index, we find that they are

What, if any, is the impact of the CPI bias on government spending and taxes?

If a country had a CPI of 105.0 last year and a CPI of 102.0 this year, then

Explain the CPI bias and how it can distort private contracts and increase government outlays.

Suppose Mack's wage was $7.00 an hour in 2001 and was $12.00 per hour in 2008.The CPI was 94 in 2001 and 201 in 2008.The 2001 wage in terms of 2008 dollars is

The CPI market basket is determined by

In 2006, the average starting salary for a history is $29,500.If the CPI was 147.5, the real salary is

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

The GDP deflator is

Suppose the CPI for the year 2010 is 133.7.This number means that

If the GDP price index is 125 and nominal GDP is $130 billion, then real GDP equals ________ billion.

If the real interest rate is 7 percent when the nominal interest is 12 rate is percent, the inflation rate is

Which of the following formulas would you use to calculate the nominal 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 inflation rate between 2009 and 2010 is

The CPI bias was estimated by the Congressional Advisory Commission on the Consumer Price Index as

The Consumer Price Index is calculated by the

In the United States, the inflation rate since 1999 generally was

For the purpose of measuring the cost of living for consumers, one reason the GDP price index is NOT a good substitute for the CPI is because the GDP price index

Explain the difference between a nominal value and a real value.

For the CPI, the market basket of good and services is modified

Consumers in Beachland consume only two goods, sodas and DVDs.If they spend $10 on sodas and $90 on DVDs a month, how many sodas and DVDs are in their CPI market basket if the price of a soda is $1 and the price of a DVD is $9.

If we compare the CPI to a perfect cost of living index, we find that they are

What, if any, is the impact of the CPI bias on government spending and taxes?

If a country had a CPI of 105.0 last year and a CPI of 102.0 this year, then

Explain the CPI bias and how it can distort private contracts and increase government outlays.

Suppose Mack's wage was $7.00 an hour in 2001 and was $12.00 per hour in 2008.The CPI was 94 in 2001 and 201 in 2008.The 2001 wage in terms of 2008 dollars is

The CPI market basket is determined by

In 2006, the average starting salary for a history is $29,500.If the CPI was 147.5, the real salary is

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