Exam 24: Measuring the Cost of Living

The CPI was 120 in 2000 and 132 in 2001.Dorgan borrowed money in 2000 and repaid the loan in 2001.If the nominal interest rate on the loan was 12 percent,then the real interest rate was

In the late 1970s,U.S.nominal interest rates were high and real interest rates were low,but in the late 1990s,U.S.nominal interest rates were low and real interest rates were high.

If the consumer price index was 80 in 2004,100 in 2005,and 110 in 2006,then the base year must be

Suppose that U.S.mining companies purchase German-made ore trucks at a reduced price.By itself,what effect will this purchase have on the GDP deflator and on the consumer price index?

The U.S.economy has experienced rising consumer prices in every year since 1965.

Table 24-5 The table below pertains to Yackandsnack,an economy in which the typical consumer's basket consists of 2 cell phones and 20 ham sandwiches. -Refer to Table 24-5.If the base year is 2008,then the CPI

If the value of the consumer price index is 110 in 2005 and 121 in 2006,then the inflation rate is 11 percent for 2006.

Scenario 24-4 Quinn has job offers in Wrexington and across the country in Charlieville.The Wrexington job would pay a salary of $50,000 per year,and the Charlieville job would pay a salary of $40,000 per year.The CPI in Wrexington is 150,and the CPI in Charlieville is 90. -Refer to Scenario 24-4.The Charlieville salary in Wrexington dollars is

Table 24-4 The table below pertains to Wrexington,an economy in which the typical consumer's basket consists of 20 pounds of meat and 10 toys. -Refer to Table 24-4.The inflation rate was

When the price of nuclear missiles rises,this change is reflected in the CPI but not in the GDP deflator.

If the cost of transportation increases by 10 percent,then,other things the same,the CPI is likely to increase by about

Bob deposits $100 in a bank account that pays an annual interest rate of 5 percent.A year later,Bob withdraws his $105.If inflation was 5 percent during the year the money was deposited,then Bob's purchasing power has not changed.

Recent changes in methods used to compute the CPI have made the

Table 24-1 The table below pertains to Pieway,an economy in which the typical consumer's basket consists of 10 bushels of peaches and 15 bushels of pecans. -Refer to Table 24-1.The cost of the basket in 2005 was

In the United States in the late 1970s,nominal interest rates were high and inflation rates were very high.As a result,real interest rates were

The real interest rate tells you

If the nominal interest rates rises,then the inflation rate must have increased.

Janelle earned a salary of $40,000 in 1996 and $65,000 in 2006.The consumer price index was 160 in 1996 and 266 in 2006.Janelle's 2006 salary in 1996 dollars is

For purposes of calculating the CPI,the housing category of consumer spending includes the cost of

Samantha goes to the grocery store to make her monthly purchase of ginger ale.As she enters the soft drink section,she notices that the price of ginger ale has increased 15 percent,so she decides to buy some peppermint tea instead.To which problem in the construction of the CPI is this situation most relevant?