Question 1

If you are earning $20,000 this year and the CPI is 165, your real income in base year prices is

Accepted Answer

A)  $121.21. 
B)  $12,121.21. 
C)  $20,000. 
D)  $16,500. 
E)  $33,000. 
A)  $121.21. 
B)  $12,121.21. 
C)  $20,000. 
D)  $16,500. 
E)  $33,000.

Question 2

What is the good or service is given the most weight in the CPI?

Accepted Answer

A)  apparel 
B)  food and beverages 
C)  housing 
D)  transportation 
E)  recreation. 
A)  apparel 
B)  food and beverages 
C)  housing 
D)  transportation 
E)  recreation.

Question 3

If the base year CPI market basket costs $250 and next year the CPI market basket costs $275, what is next year's CPI?

Accepted Answer

The CPI eq

Question 4

The prices of the goods and services in the CPI market basket are collected

Accepted Answer

A)  monthly. 
B)  yearly. 
C)  quarterly. 
D)  infrequently. 
E)  only when the CPI market basket is determined by the Consumer Expenditure Survey. 
A)  monthly. 
B)  yearly. 
C)  quarterly. 
D)  infrequently. 
E)  only when the CPI market basket is determined by the Consumer Expenditure Survey.

Question 5

The fact the consumers substitute one good for another when prices change is

Accepted Answer

A)  taken into account by the fixed market basket used in calculating the CPI. 
B)  not taken into account by the fixed market basket used in calculating the CPI. 
C)  not important to economists. 
D)  a reason why the CPI is used to calculate inflation rates. 
E)  a reason why the CPI understates the actual change in the cost of living. 
A)  taken into account by the fixed market basket used in calculating the CPI. 
B)  not taken into account by the fixed market basket used in calculating the CPI. 
C)  not important to economists. 
D)  a reason why the CPI is used to calculate inflation rates. 
E)  a reason why the CPI understates the actual change in the cost of living.

Question 6

"The market basket used to calculate the CPI is revised monthly to more accurately depict consumers' choices.The price data for the CPI are collected every month." Are the previous sentences true or false?

Accepted Answer

The first sentence is false and the seco

Question 7

If the GDP price index is 137, this value means that prices have increased

Accepted Answer

A)  137 percent in the last year. 
B)  37 percent in the last year. 
C)  37 percent since the base year. 
D)  137 percent since the base year. 
E)  63 percent since the base year 
A)  137 percent in the last year. 
B)  37 percent in the last year. 
C)  37 percent since the base year. 
D)  137 percent since the base year. 
E)  63 percent since the base year

Question 8

If real GDP is greater than nominal GDP then the GDP price index ________.

Accepted Answer

A)  is greater than 100 
B)  is less than 100 
C)  is equal to 100 
D)  either equal to or greater than 100 
E)  None of the above answers is correct because we need to choose a new base year. 
A)  is greater than 100 
B)  is less than 100 
C)  is equal to 100 
D)  either equal to or greater than 100 
E)  None of the above answers is correct because we need to choose a new base year.

Question 9

If your nominal income is $80,000 and your real income in base year prices is $71,500, what is the CPI?

Accepted Answer

A)  89 
B)  100 
C)  112 
D)  106. 
E)  150 
A)  89 
B)  100 
C)  112 
D)  106. 
E)  150

Question 10

The reference base period for the CPI is

Accepted Answer

A)  the previous year. 
B)  whatever the political party that is in control of Congress decides. 
C)  currently 1913. 
D)  currently 1982 to 1984. 
E)  currently 2005. 
A)  the previous year. 
B)  whatever the political party that is in control of Congress decides. 
C)  currently 1913. 
D)  currently 1982 to 1984. 
E)  currently 2005.

Question 11

Because the CPI overstates inflation,

Accepted Answer

A)  when wages are linked to the CPI, workers' wages become too low as time passes. 
B)  as time passes, government payments are increasingly lower than intended. 
C)  as time passes, government outlays are increased by more than necessary to compensate for inflation. 
D)  workers do not receive adequate compensation for price changes. 
E)  most contracts use the GDP deflator to measure inflation. 
A)  when wages are linked to the CPI, workers' wages become too low as time passes. 
B)  as time passes, government payments are increasingly lower than intended. 
C)  as time passes, government outlays are increased by more than necessary to compensate for inflation. 
D)  workers do not receive adequate compensation for price changes. 
E)  most contracts use the GDP deflator to measure inflation.

Question 12

In 2009, apples cost $1.49 a pound.Suppose the CPI was 120 in 2009 and 140 in 2010.If there is no change in the real price of an apple in 2010, what is the price of a pound of apples in 2010?

Accepted Answer

A)  $2.74 
B)  $1.69 
C)  $1.66 
D)  $1.74 
E)  $1.28 
A)  $2.74 
B)  $1.69 
C)  $1.66 
D)  $1.74 
E)  $1.28

Question 13

In 1998, Pablo earned $200 per week at his job.In 2008, Pablo earned $240 per week.If the CPI in 1998 was 100 and the CPI in 2008 was 152, then

Accepted Answer

A)  Pablo was better off in 2008 because his weekly wage was higher. 
B)  the 1998 wage measured in 2008 dollars is $157.89 
C)  the 2008 wage measured in 1998 dollars is $157.89. 
D)  the 1998 wage measured in 2008 dollars is $131.58 
E)  the 1983 wage measured in 1994 dollars is $100. 
A)  Pablo was better off in 2008 because his weekly wage was higher. 
B)  the 1998 wage measured in 2008 dollars is $157.89 
C)  the 2008 wage measured in 1998 dollars is $157.89. 
D)  the 1998 wage measured in 2008 dollars is $131.58 
E)  the 1983 wage measured in 1994 dollars is $100.

Question 14

The Consumer Expenditure Survey measures

Accepted Answer

A)  households' spending patterns. 
B)  the wholesale price on what consumers buy so that a markup percentage can be found. 
C)  the maximum price buyers will pay for a good or service. 
D)  consumers' incomes. 
E)  the jobs at which consumers work. 
A)  households' spending patterns. 
B)  the wholesale price on what consumers buy so that a markup percentage can be found. 
C)  the maximum price buyers will pay for a good or service. 
D)  consumers' incomes. 
E)  the jobs at which consumers work.

Question 15

If the CPI this year is 240 and the CPI in the previous year was 200, what is the annual inflation rate?

Accepted Answer

A)  40.0 percent. 
B)  20.0 percent. 
C)  50 percent. 
D)  16.7 percent. 
E)  -16.7 percent. 
A)  40.0 percent. 
B)  20.0 percent. 
C)  50 percent. 
D)  16.7 percent. 
E)  -16.7 percent.

Question 16

In 2010, the reference base period for the CPI for the nation of Webot, a typical consumer spent $30 on potatoes and $150 on steak.If the price of steak is $15 and the price of potatoes is $1 then there are ________ units of steak and ________ units of potatoes in the CPI market basket.

Accepted Answer

A)  30; 150 
B)  10; 30 
C)  150; 30 
D)  5; 30 
E)  None of the above answers is correct. 
A)  30; 150 
B)  10; 30 
C)  150; 30 
D)  5; 30 
E)  None of the above answers is correct.

Question 17

Define the nominal interest rate and the real interest rate.Discuss the relationship between the nominal interest rate and the real interest rate.

Accepted Answer

The nominal interest rate is the percent

Question 18

The Consumer Price Index measures the average of the prices paid by urban consumers for a ________ of consumer goods and services.

Accepted Answer

A)  random selection 
B)  changing selection 
C)  fixed market basket 
D)  subjective selection 
E)  least-cost market basket 
A)  random selection 
B)  changing selection 
C)  fixed market basket 
D)  subjective selection 
E)  least-cost market basket

Question 19

If the nominal interest rate equals 10 percent and the inflation rate equals 6 percent, what does the real interest rate equal?

Accepted Answer

The real interest rate equals

Question 20

The outlet substitution bias is most likely to put ________ and so ________ the inflation rate.

Accepted Answer

A)  a downward bias into the CPI; understate 
B)  an upward bias into the CPI; understate 
C)  an upward bias into the CPI; overstate 
D)  a downward bias into the CPI; overstate 
E)  no bias into the CPI because it is such a small effect; have no effect on 
A)  a downward bias into the CPI; understate 
B)  an upward bias into the CPI; understate 
C)  an upward bias into the CPI; overstate 
D)  a downward bias into the CPI; overstate 
E)  no bias into the CPI because it is such a small effect; have no effect on

If you are earning $20,000 this year and the CPI is 165, your real income in base year prices is

What is the good or service is given the most weight in the CPI?

If the base year CPI market basket costs $250 and next year the CPI market basket costs $275, what is next year's CPI?

The prices of the goods and services in the CPI market basket are collected

The fact the consumers substitute one good for another when prices change is

"The market basket used to calculate the CPI is revised monthly to more accurately depict consumers' choices.The price data for the CPI are collected every month." Are the previous sentences true or false?

If the GDP price index is 137, this value means that prices have increased

If real GDP is greater than nominal GDP then the GDP price index ________.

If your nominal income is $80,000 and your real income in base year prices is $71,500, what is the CPI?

The reference base period for the CPI is

Because the CPI overstates inflation,

In 2009, apples cost $1.49 a pound.Suppose the CPI was 120 in 2009 and 140 in 2010.If there is no change in the real price of an apple in 2010, what is the price of a pound of apples in 2010?

In 1998, Pablo earned $200 per week at his job.In 2008, Pablo earned $240 per week.If the CPI in 1998 was 100 and the CPI in 2008 was 152, then

The Consumer Expenditure Survey measures

If the CPI this year is 240 and the CPI in the previous year was 200, what is the annual inflation rate?

In 2010, the reference base period for the CPI for the nation of Webot, a typical consumer spent $30 on potatoes and $150 on steak.If the price of steak is $15 and the price of potatoes is $1 then there are units of steak and units of potatoes in the CPI market basket.

Define the nominal interest rate and the real interest rate.Discuss the relationship between the nominal interest rate and the real interest rate.

The Consumer Price Index measures the average of the prices paid by urban consumers for a ________ of consumer goods and services.

If the nominal interest rate equals 10 percent and the inflation rate equals 6 percent, what does the real interest rate equal?

The outlet substitution bias is most likely to put and so the inflation rate.

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

If you are earning $20,000 this year and the CPI is 165, your real income in base year prices is

What is the good or service is given the most weight in the CPI?

If the base year CPI market basket costs $250 and next year the CPI market basket costs $275, what is next year's CPI?

The prices of the goods and services in the CPI market basket are collected

The fact the consumers substitute one good for another when prices change is

"The market basket used to calculate the CPI is revised monthly to more accurately depict consumers' choices.The price data for the CPI are collected every month." Are the previous sentences true or false?

If the GDP price index is 137, this value means that prices have increased

If real GDP is greater than nominal GDP then the GDP price index ________.

If your nominal income is $80,000 and your real income in base year prices is $71,500, what is the CPI?

The reference base period for the CPI is

Because the CPI overstates inflation,

In 2009, apples cost $1.49 a pound.Suppose the CPI was 120 in 2009 and 140 in 2010.If there is no change in the real price of an apple in 2010, what is the price of a pound of apples in 2010?

In 1998, Pablo earned $200 per week at his job.In 2008, Pablo earned $240 per week.If the CPI in 1998 was 100 and the CPI in 2008 was 152, then

The Consumer Expenditure Survey measures

If the CPI this year is 240 and the CPI in the previous year was 200, what is the annual inflation rate?

In 2010, the reference base period for the CPI for the nation of Webot, a typical consumer spent $30 on potatoes and $150 on steak.If the price of steak is $15 and the price of potatoes is $1 then there are ________ units of steak and ________ units of potatoes in the CPI market basket.

Define the nominal interest rate and the real interest rate.Discuss the relationship between the nominal interest rate and the real interest rate.

The Consumer Price Index measures the average of the prices paid by urban consumers for a ________ of consumer goods and services.

If the nominal interest rate equals 10 percent and the inflation rate equals 6 percent, what does the real interest rate equal?

The outlet substitution bias is most likely to put ________ and so ________ the inflation rate.

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

In 2010, the reference base period for the CPI for the nation of Webot, a typical consumer spent $30 on potatoes and $150 on steak.If the price of steak is $15 and the price of potatoes is $1 then there are units of steak and units of potatoes in the CPI market basket.

The outlet substitution bias is most likely to put and so the inflation rate.