Exam 11: Measuring the Cost of Living

Nate collected Social Security payments of $220 a month in 1985. If the price index rose from 90 to 108 between 1985 and 1986, then his Social Security payments for 1986 should have been

You know that a candy bar costs sixty cents today. You also know the CPI for 1962 and the CPI for today. Which of the following would you use to compute the price of the candy bar in 1962 prices?

Table 11-12. Will's expenditures on food for three consecutive years, along with other values, are presented in the table below. -Refer to Table 11-12. Will's 2009 food expenditures in 2010 dollars amount to

The consumer price index was 200 in 2006 and 210 in 2007. The nominal interest rate during this period was 6.5 percent. What was the real interest rate during this period?

Which of the following changes in the price index produces the greatest rate of inflation: 106 to 112, 112 to 118, or 118 to 124?

If the price of domestically produced power tools increases, then

Henry Ford paid his workers $5 a day in 1914, when the CPI was 10. Today, with the price index at 177, the $5 a day is worth $88.50.

The inflation rate you are likely to hear on the nightly news is calculated from

The basket of goods in the consumer price index changes

For any given year, the CPI is the price of the basket of goods and services in the

The real interest rate tells you

If the nominal interest rate is 5 percent and the real interest rate is 2 percent, then the inflation rate is 3 percent.

The inflation rate reported in the news is usually calculated from the GDP deflator rather than the consumer price index.

If the nominal interest rate is 6 percent and the rate of inflation is 10 percent, then the real interest rate is

When the overall level of prices in the economy is increasing, economists say that the economy is experiencing

The nominal interest rate tells you how fast the number of dollars in your bank account rises over time.

Table 11-12. Will's expenditures on food for three consecutive years, along with other values, are presented in the table below. -Refer to Table 11-12. If the nominal interest rate was 8 percent in 2010, then

Jay and Joyce meet George, the banker, to work out the details of a mortgage. They all expect that inflation will be 2 percent over the term of the loan, and they agree on a nominal interest rate of 6 percent. As it turns out, the inflation rate is 5 percent over the term of the loan. a.What was the expected real interest rate?

When computing the cost of the basket of goods and services purchased by a typical consumer, which of the following changes from year to year?

The introduction of a new good