Question 1

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 2

If the CPI decreases from one year to the next, then the inflation rate is

Accepted Answer

A) positive. 
B) above 100. 
C) below 100. 
D) negative. 
E) 0. 
A) positive. 
B) above 100. 
C) below 100. 
D) negative. 
E) 0.

Question 3

When the price of, say, a package of rice changes, what must the BLS do next?

Accepted Answer

A) immediately incorporate the new price into the CPI. 
B) determine if the new price is consistent with other price changes for the period. 
C) determine if the size, quality, weight, or packing of the rice has changed and adjust the price accordingly. 
D) ignore the price change. 
E) immediately incorporate the new price into the CPI only if the price has fallen. 
A) immediately incorporate the new price into the CPI. 
B) determine if the new price is consistent with other price changes for the period. 
C) determine if the size, quality, weight, or packing of the rice has changed and adjust the price accordingly. 
D) ignore the price change. 
E) immediately incorporate the new price into the CPI only if the price has fallen.

Question 4

A change in the real wage rate measures the change in the

Accepted Answer

A) price of goods and services that an hour's work can buy. 
B) nominal wage of an hour's work. 
C) quantity of goods and services that an hour's work can buy. 
D) inflation rate affecting the labor market. 
E) CPI. 
A) price of goods and services that an hour's work can buy. 
B) nominal wage of an hour's work. 
C) quantity of goods and services that an hour's work can buy. 
D) inflation rate affecting the labor market. 
E) CPI.

Question 5

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 6

"The real interest rate is found by dividing the nominal interest rate by the CPI." Is this statement true or false?

Accepted Answer

The statement is false. The re

Question 7

Which of the following is a bias in the CPI?
I. new goods bias
Ii. index change bias
Iii. commodity substitution bias

Accepted Answer

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

Question 8

In order to determine if the quantity of goods and services that an hour's work can buy has increased or decreased between 2000 and 2012, one should compare the

Accepted Answer

A) 2000 nominal wage with the 2012 nominal wage. 
B) 2000 real wage with the 2012 nominal wage. 
C) 2000 real wage with the 2012 real wage. 
D) 2000 nominal wage with the 2012 real wage. 
E) 2000 nominal wage with the 2012 nominal wage and the 2000 real wage with the 2012 real wage because both are important factors determining if workers can buy more or fewer goods with an hour's work. 
A) 2000 nominal wage with the 2012 nominal wage. 
B) 2000 real wage with the 2012 nominal wage. 
C) 2000 real wage with the 2012 real wage. 
D) 2000 nominal wage with the 2012 real wage. 
E) 2000 nominal wage with the 2012 nominal wage and the 2000 real wage with the 2012 real wage because both are important factors determining if workers can buy more or fewer goods with an hour's work.

Question 9

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 10

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 11

The fact that the CPI is a biased measure of the inflation rate means government outlays will

Accepted Answer

A) increase at a faster rate than the actual inflation rate. 
B) increase at the same rate as the actual inflation rate. 
C) increase at a slower rate than the actual inflation rate. 
D) sometimes increase faster and sometimes increase slower than the actual inflation rate depending on whether the actual inflation rate exceeds 1.1 percent per year or is less than 1.1 percent per year. 
E) None of the above because the bias in inflation measured using the CPI has nothing to do with government outlays. 
A) increase at a faster rate than the actual inflation rate. 
B) increase at the same rate as the actual inflation rate. 
C) increase at a slower rate than the actual inflation rate. 
D) sometimes increase faster and sometimes increase slower than the actual inflation rate depending on whether the actual inflation rate exceeds 1.1 percent per year or is less than 1.1 percent per year. 
E) None of the above because the bias in inflation measured using the CPI has nothing to do with government outlays.

Question 12

To measure the CPI, the BLS economic assistants check the prices of

Accepted Answer

A) about 8,000 goods and services every year. 
B) about 8,000 goods and services every month. 
C) about 80,000 goods and services every month. 
D) about 80,000 goods and services every year. 
E) only the goods and services whose prices have changed every month. 
A) about 8,000 goods and services every year. 
B) about 8,000 goods and services every month. 
C) about 80,000 goods and services every month. 
D) about 80,000 goods and services every year. 
E) only the goods and services whose prices have changed every month.

Question 13

In 1995, the CPI was 152.5 and the price of an economics textbook was $70.00 and a music CD was $16.00. If the CPI was 172.3 in 2011, what were the prices of the economics textbook and the music CD in 2011 dollars?

Accepted Answer

To adjust the two prices, the ratio of t

Question 14

The more money an average household spends on one specific type of good or service per month, the

Accepted Answer

A) smaller the relative importance of that item in the CPI market basket. 
B) larger the relative importance of that item in the CPI market basket. 
C) costlier it will be to conduct the Consumer Expenditure Survey. 
D) less significant an increase in the price of that good or service will be for the household. 
E) more frequently its price is checked when calculating the CPI. 
A) smaller the relative importance of that item in the CPI market basket. 
B) larger the relative importance of that item in the CPI market basket. 
C) costlier it will be to conduct the Consumer Expenditure Survey. 
D) less significant an increase in the price of that good or service will be for the household. 
E) more frequently its price is checked when calculating the CPI.

Question 15

16.4 Chapter Figures
  
-The trends displayed in the table can best be explained by

Accepted Answer

A) the nominal wage rate has increased at a rate about equal to the inflation rate. 
B) the real wage rate has increased at a rate about equal to the inflation rate. 
C) service industries have increased as a proportion of the economy and they tend to have higher nominal wage rates. 
D) the inflation rate has been rising over the time period. 
E) None of the above can explain the trends in the figure. 
A) the nominal wage rate has increased at a rate about equal to the inflation rate. 
B) the real wage rate has increased at a rate about equal to the inflation rate. 
C) service industries have increased as a proportion of the economy and they tend to have higher nominal wage rates. 
D) the inflation rate has been rising over the time period. 
E) None of the above can explain the trends in the figure.

Question 16

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 17

The GDP price index can be interpreted as

Accepted Answer

A) (nominal GDP ÷ real GDP)× 100. 
B) (real GDP ÷ nominal GDP)× 100. 
C) (nominal GDP + real GDP)÷ 100. 
D) (nominal GDP - real GDP)÷ 100. 
E) (real GDP - nominal GDP)÷ 100. 
A) (nominal GDP ÷ real GDP)× 100. 
B) (real GDP ÷ nominal GDP)× 100. 
C) (nominal GDP + real GDP)÷ 100. 
D) (nominal GDP - real GDP)÷ 100. 
E) (real GDP - nominal GDP)÷ 100.

Question 18

During periods when the inflation rate is positive, how does the real interest rate compare to the nominal interest rate?

Accepted Answer

The real interest rate equals the nomina

Question 19

The formula for the CPI is

Accepted Answer

A) (Cost of CPI market basket at base period prices ÷ Cost of CPI market basket at current period prices)× 100. 
B) (Cost of CPI market basket at current period prices - Cost of CPI market basket at base period prices)× 100. 
C) (Cost of CPI market basket at base period prices - Cost of CPI market basket at current period prices)× 100. 
D) (Cost of CPI market basket at current period prices ÷ Cost of CPI market basket at base period prices)× 100. 
E) (Cost of CPI market basket at current period prices + Cost of CPI market basket at base period prices)× 100. 
A) (Cost of CPI market basket at base period prices ÷ Cost of CPI market basket at current period prices)× 100. 
B) (Cost of CPI market basket at current period prices - Cost of CPI market basket at base period prices)× 100. 
C) (Cost of CPI market basket at base period prices - Cost of CPI market basket at current period prices)× 100. 
D) (Cost of CPI market basket at current period prices ÷ Cost of CPI market basket at base period prices)× 100. 
E) (Cost of CPI market basket at current period prices + Cost of CPI market basket at base period prices)× 100.

Question 20

$$\begin{array} { | l | c | c | c | c | } 
\hline \text { Item } & \begin{array} { c } 
\text { Quantity } \
( 2011 )
\end{array} & \text { Price (2011) } & \begin{array} { c } 
\text { Quantity } \
( 2012 )
\end{array} & \text { Price (2012) } \
\hline \text { Magazines } & 400 & \$ 5.00 & 450 & \$ 4.50 \
\hline \text { Movie tickets } & 50 & \$ 6.00 & 200 & \$ 8.00 \
\hline \text { Pizzas } & 100 & \$ 10.00 & 120 & \$ 10.50 \
\hline
\end{array}$$ 
The data in the table above shows the consumption by families in an economy. The year 2011 is the reference base period.
-Based on the table above, the CPI for 2011 is

Accepted Answer

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

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

If the CPI decreases from one year to the next, then the inflation rate is

When the price of, say, a package of rice changes, what must the BLS do next?

A change in the real wage rate measures the change in the

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

"The real interest rate is found by dividing the nominal interest rate by the CPI." Is this statement true or false?

Which of the following is a bias in the CPI? I. new goods bias Ii. index change bias Iii. commodity substitution bias

In order to determine if the quantity of goods and services that an hour's work can buy has increased or decreased between 2000 and 2012, one should compare the

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

The fact that the CPI is a biased measure of the inflation rate means government outlays will

To measure the CPI, the BLS economic assistants check the prices of

In 1995, the CPI was 152.5 and the price of an economics textbook was $70.00 and a music CD was $16.00. If the CPI was 172.3 in 2011, what were the prices of the economics textbook and the music CD in 2011 dollars?

The more money an average household spends on one specific type of good or service per month, the

16.4 Chapter Figures -The trends displayed in the table can best be explained by

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

The GDP price index can be interpreted as

During periods when the inflation rate is positive, how does the real interest rate compare to the nominal interest rate?

The formula for the CPI is

Getting Started

The Us and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, Education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

Exam 16: The Cpi and the Cost of Living

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

If the CPI decreases from one year to the next, then the inflation rate is

When the price of, say, a package of rice changes, what must the BLS do next?

A change in the real wage rate measures the change in the

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

"The real interest rate is found by dividing the nominal interest rate by the CPI." Is this statement true or false?

Which of the following is a bias in the CPI? I. new goods bias Ii. index change bias Iii. commodity substitution bias

In order to determine if the quantity of goods and services that an hour's work can buy has increased or decreased between 2000 and 2012, one should compare the

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

The fact that the CPI is a biased measure of the inflation rate means government outlays will

To measure the CPI, the BLS economic assistants check the prices of

In 1995, the CPI was 152.5 and the price of an economics textbook was $70.00 and a music CD was $16.00. If the CPI was 172.3 in 2011, what were the prices of the economics textbook and the music CD in 2011 dollars?

The more money an average household spends on one specific type of good or service per month, the

16.4 Chapter Figures -The trends displayed in the table can best be explained by

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

The GDP price index can be interpreted as

During periods when the inflation rate is positive, how does the real interest rate compare to the nominal interest rate?

The formula for the CPI is

Getting Started

The Us and Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, Education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters