Question 1

If your nominal income is $75,000 and your real income in base year prices is $60,000, what is the CPI?

Accepted Answer

A) 100 
B) 125 
C) 80 
D) 250 
E) 200 
A) 100 
B) 125 
C) 80 
D) 250 
E) 200

Question 2

$$\begin{array} { l c c c c } 
 { \text { Item } } & \begin{array} { c } 
\text { Quantity } \
\mathbf { ( 2 0 1 1 ) }
\end{array} & \begin{array} { l } 
\text { Price } \
\mathbf { ( 2 0 1 1 ) }
\end{array} & \begin{array} { c } 
\text { Quantity } \
\mathbf { ( 2 0 1 2 ) }
\end{array} & \begin{array} { l } 
\text { Price } \
\mathbf { ( 2 0 1 2 ) }
\end{array} \
\hline \text { Sneakers } & 2 & \$ 55 & 2 & \$ 60 \
\text { Manicures } & 1 & \$ 35 & 1 & \$ 40 \
\hline
\end{array}$$
-Consumers in a country buy only two goods, sneakers and manicures. The prices and quantities purchased by urban households are in the table above. The reference base year is 2011. For these data, the CPI for 2012 is

Accepted Answer

A) 145. 
B) 100. 
C) 160. 
D) 10. 
E) 110. 
A) 145. 
B) 100. 
C) 160. 
D) 10. 
E) 110.

Question 3

In the United States for the last 40 years, the nominal interest rate

Accepted Answer

A) and real interest rates both decreased in almost every year. 
B) and real interest rates were both constant in almost every year. 
C) was constant in most years and the real interest rate fluctuated. 
D) exceeded the real interest rate in virtually all the years. 
E) exceeded the real interest rate in about one half of the years and the real interest rate was greater than the nominal interest rate in the other half of the years. 
A) and real interest rates both decreased in almost every year. 
B) and real interest rates were both constant in almost every year. 
C) was constant in most years and the real interest rate fluctuated. 
D) exceeded the real interest rate in virtually all the years. 
E) exceeded the real interest rate in about one half of the years and the real interest rate was greater than the nominal interest rate in the other half of the years.

Question 4

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 5

In 2012, the nominal wage rate for unionized carpenters was $37.50 and the CPI was 204. Calculate the real wage rate for this group of workers.

Accepted Answer

A) $37.50 
B) $47.09 
C) $5.44. 
D) $18.38 
E) $1.84. 
A) $37.50 
B) $47.09 
C) $5.44. 
D) $18.38 
E) $1.84.

Question 6

Is the CPI a biased measure of the inflation rate?
 Explain your answer.

Accepted Answer

There are four sources of bias in the CP

Question 7

Since 1981, 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 8

If higher prices cause buyers to shop at discount stores, the CPI has

Accepted Answer

A) a new goods bias. 
B) a quality change bias. 
C) a commodity substitution bias. 
D) an outlet substitution bias. 
E) a discounted bias. 
A) a new goods bias. 
B) a quality change bias. 
C) a commodity substitution bias. 
D) an outlet substitution bias. 
E) a discounted bias.

Question 9

Which of the following formulas is used to calculate the inflation rate?

Accepted Answer

A) inflation rate = 100 × $\left( \frac { \text { CPI in currentyear } } { \text { CPI in base period } } \right)$ 
B) inflation rate = 100 × $\left( \frac { \text { CPI in previousyear } } { \text { CPI in current year } } \right)$ 
C) Inflation rate = 100 ×   
D) Inflation rate = 100 ×   
E) inflation rate = 100 × $\left( \frac { \text { CPI in base year } } { \text { CPI in currentyear } } \right)$ 
A) inflation rate = 100 × $\left( \frac { \text { CPI in currentyear } } { \text { CPI in base period } } \right)$ 
B) inflation rate = 100 × $\left( \frac { \text { CPI in previousyear } } { \text { CPI in current year } } \right)$ 
C) Inflation rate = 100 ×   
D) Inflation rate = 100 ×   
E) inflation rate = 100 × $\left( \frac { \text { CPI in base year } } { \text { CPI in currentyear } } \right)$

Question 10

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 11

If you have the cost of the CPI market basket at current prices and the cost of the CPI market basket at base period prices, how do you calculate the CPI?

Accepted Answer

The answer of If you have the cost of the...

Question 12

Looking at the annual inflation rates in the United States from 2000 to 2011, we see that they

Accepted Answer

A) were above 10 percent throughout the period. 
B) were at or below 5 percent throughout the period and was negative for a year. 
C) started low, but increased to over 9 percent by the end of the period. 
D) started out above 10 percent but fell to 5 percent by the end of the period. 
E) were negative for most of the years during this period. 
A) were above 10 percent throughout the period. 
B) were at or below 5 percent throughout the period and was negative for a year. 
C) started low, but increased to over 9 percent by the end of the period. 
D) started out above 10 percent but fell to 5 percent by the end of the period. 
E) were negative for most of the years during this period.

Question 13

If the CPI this year is 175.2 and next year the CPI is 176.1, what was the inflation rate over the year?

Accepted Answer

The inflation rate e

Question 14

In the United States between 1981 and 2011, the

Accepted Answer

A) nominal wage rate increased more than the real wage rate. 
B) real wage rate increased more than the nominal wage rate. 
C) nominal and real wage rates increased the same amount. 
D) real and the nominal wage rates decreased the same amount. 
E) nominal wage rate decreased and the real wage rate increased. 
A) nominal wage rate increased more than the real wage rate. 
B) real wage rate increased more than the nominal wage rate. 
C) nominal and real wage rates increased the same amount. 
D) real and the nominal wage rates decreased the same amount. 
E) nominal wage rate decreased and the real wage rate increased.

Question 15

$$\begin{array} { c c c c } 
\text { Item } & \begin{array} { c } 
\text { Quantity } \
\mathbf { ( 2 0 1 1 ) }
\end{array} & \begin{array} { c } 
\text { Price } \
\mathbf { ( 2 0 1 1 ) }
\end{array} & \begin{array} { c } 
\text { Price } \
\mathbf { ( 2 0 1 2 ) }
\end{array} \
\hline \text { Salt } & 2 & \$ 1.00 & \$ 2.00 \
\text { Bread } & 20 & \$ 2.50 & \$ 3.00 \
\hline
\end{array}$$
-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 2011. The inflation rate between 2011 and 2012 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 16

Citicorp charges a 11 percent interest rate on all new car loans. If the inflation rate is 6 percent, Citicorp receives a real interest rate of

Accepted Answer

A) 11 percent. 
B) 6 percent. 
C) 1.83 percent. 
D) 5 percent. 
E) 0.54 percent. 
A) 11 percent. 
B) 6 percent. 
C) 1.83 percent. 
D) 5 percent. 
E) 0.54 percent.

Question 17

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 18

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 19

When firms decide how much labor to hire, one of the factors that influences them is the

Accepted Answer

A) nominal wage rate plus the inflation rate. 
B) nominal wage rate divided by the price level and then multiplied by 100. 
C) nominal wage rate minus the inflation rate. 
D) real wage rate plus the inflation rate. 
E) nominal wage rate divided by the inflation rate and then multiplied by 100. 
A) nominal wage rate plus the inflation rate. 
B) nominal wage rate divided by the price level and then multiplied by 100. 
C) nominal wage rate minus the inflation rate. 
D) real wage rate plus the inflation rate. 
E) nominal wage rate divided by the inflation rate and then multiplied by 100.

Question 20

The items included in the CPI are

Accepted Answer

A) final goods produced in the United States. 
B) final goods and services produced in the United States. 
C) goods and services consumed by the typical urban household. 
D) only goods and services produced within the current year and consumed by the typical household. 
E) gods but not services consumed by the typical urban household. 
A) final goods produced in the United States. 
B) final goods and services produced in the United States. 
C) goods and services consumed by the typical urban household. 
D) only goods and services produced within the current year and consumed by the typical household. 
E) gods but not services consumed by the typical urban household.

If your nominal income is $75,000 and your real income in base year prices is $60,000, what is the CPI?

Item Quantity Price Quantity Price Sneakers 2 \ 55 2 \ 60 Manicures 1 \ 35 1 \ 40 -Consumers in a country buy only two goods, sneakers and manicures. The prices and quantities purchased by urban households are in the table above. The reference base year is 2011. For these data, the CPI for 2012 is

In the United States for the last 40 years, the nominal interest rate

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

In 2012, the nominal wage rate for unionized carpenters was $37.50 and the CPI was 204. Calculate the real wage rate for this group of workers.

Is the CPI a biased measure of the inflation rate? Explain your answer.

Since 1981, the

If higher prices cause buyers to shop at discount stores, the CPI has

Which of the following formulas is used to calculate the inflation rate?

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

If you have the cost of the CPI market basket at current prices and the cost of the CPI market basket at base period prices, how do you calculate the CPI?

Looking at the annual inflation rates in the United States from 2000 to 2011, we see that they

If the CPI this year is 175.2 and next year the CPI is 176.1, what was the inflation rate over the year?

In the United States between 1981 and 2011, the

Item Quantity Price Price 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 2011. The inflation rate between 2011 and 2012 is

Citicorp charges a 11 percent interest rate on all new car loans. If the inflation rate is 6 percent, Citicorp receives a real interest rate of

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?

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

When firms decide how much labor to hire, one of the factors that influences them is the

The items included in the CPI are

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

If your nominal income is $75,000 and your real income in base year prices is $60,000, what is the CPI?

Item Quantity Price Quantity Price Sneakers 2 \ 55 2 \ 60 Manicures 1 \ 35 1 \ 40 -Consumers in a country buy only two goods, sneakers and manicures. The prices and quantities purchased by urban households are in the table above. The reference base year is 2011. For these data, the CPI for 2012 is

In the United States for the last 40 years, the nominal interest rate

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

In 2012, the nominal wage rate for unionized carpenters was $37.50 and the CPI was 204. Calculate the real wage rate for this group of workers.

Is the CPI a biased measure of the inflation rate? Explain your answer.

Since 1981, the

If higher prices cause buyers to shop at discount stores, the CPI has

Which of the following formulas is used to calculate the inflation rate?

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

If you have the cost of the CPI market basket at current prices and the cost of the CPI market basket at base period prices, how do you calculate the CPI?

Looking at the annual inflation rates in the United States from 2000 to 2011, we see that they

If the CPI this year is 175.2 and next year the CPI is 176.1, what was the inflation rate over the year?

In the United States between 1981 and 2011, the

Item Quantity Price Price 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 2011. The inflation rate between 2011 and 2012 is

Citicorp charges a 11 percent interest rate on all new car loans. If the inflation rate is 6 percent, Citicorp receives a real interest rate of

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?

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

When firms decide how much labor to hire, one of the factors that influences them is the

The items included in the CPI are

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