Question 1

If the CPI was 120 in 1994, was 126 in 1995, and was 134.82 in 1996, what was the inflation rate in 1995 and in 1996?

Accepted Answer

The inflation rate i

Question 2

There is no longer much debate among economists concerning the severity of and the solution to the problems in using the CPI to measure the cost of living.

Accepted Answer

A) True 
 B)False

Question 3

In 1986, Ken bought a Ford Mustang for $8,000. If the price index was 122 in 1986 and the price index was 280 in 2011, then what is the price of the Mustang in 2011 dollars?

Accepted Answer

A)  $3,485.71 
B)  $8,100.71 
C)  $18,360.66 
D)  $22,400.00 
A)  $3,485.71 
B)  $8,100.71 
C)  $18,360.66 
D)  $22,400.00

Question 4

From 2013 to 2014, the CPI for medical care increased from 150 to 159. What was the inflation rate for medical care?

Accepted Answer

A)  5.7 percent 
B)  6.0 percent 
C)  9.0 percent 
D)  59.0 percent 
A)  5.7 percent 
B)  6.0 percent 
C)  9.0 percent 
D)  59.0 percent

Question 5

Table 24-10
The table below shows the prices of baseballs and baseball bats for three years. Assume the typical consumer's basket consists of 6 baseballs and 2 baseball bats.
  
-Refer to Table 24-10. If 2010 is the base year, then the consumer price index was

Accepted Answer

A)  77.40 in 2008, 85.16 in 2009, and 100.00 in 2010. 
B)  50.50 in 2008, 67.50 in 2009, and 100.00 in 2010. 
C)  90.88 in 2008, 85.16 in 2009, and 100.00 in 2010. 
D)  169.50 in 2008, 186.50 in 2009, and 219.00 in 2010. 
A)  77.40 in 2008, 85.16 in 2009, and 100.00 in 2010. 
B)  50.50 in 2008, 67.50 in 2009, and 100.00 in 2010. 
C)  90.88 in 2008, 85.16 in 2009, and 100.00 in 2010. 
D)  169.50 in 2008, 186.50 in 2009, and 219.00 in 2010.

Question 6

Table 24-5
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 24-5. If the base year is 2004, then the CPI in 2005 was

Accepted Answer

A)  88.9. 
B)  90. 
C)  100. 
D)  112.5. 
A)  88.9. 
B)  90. 
C)  100. 
D)  112.5.

Question 7

Table 24-1
The table below lists annual consumer price index and inflation rates for a country over the period 2005-2010. Assume the year 2005 is used as the base year.
  
-Refer to Table 24-1. What belongs in space E?

Accepted Answer

A)  60% 
B)  6% 
C)  3.9% 
D)  6.7% 
A)  60% 
B)  6% 
C)  3.9% 
D)  6.7%

Question 8

For an imaginary economy, the consumer price index was 80 in 2014, 100 in 2015, and 140 in 2016. Which of the following statements is correct?

Accepted Answer

A)  If the basket of goods that is used to calculate the CPI cost $40 in 2014, then that basket of goods cost $60 in 2015. 
B)  If the basket of goods that is used to calculate the CPI cost $25 in 2015, then that basket of goods cost $35 in 2016. 
C)  The overall level of prices increased by 60 percent between 2014 and 2016. 
D)  All of the above are correct. 
A)  If the basket of goods that is used to calculate the CPI cost $40 in 2014, then that basket of goods cost $60 in 2015. 
B)  If the basket of goods that is used to calculate the CPI cost $25 in 2015, then that basket of goods cost $35 in 2016. 
C)  The overall level of prices increased by 60 percent between 2014 and 2016. 
D)  All of the above are correct.

Question 9

Suppose that the price of one gallon of milk was $0.25 in 1950, that the CPI in 1950 was 25, and that in 2000 the CPI was 200.What is the price of a 1950 gallon of milk in 2000 dollars?

Accepted Answer

The price of a 1950

Question 10

In 1970, Professor Plum earned $12,000; in 1980, he earned $24,000; and in 1990, he earned $36,000. If the CPI was 40 in 1970, 70 in 1980, and 130 in 1990, then in real terms, Professor Plum's salary was highest in

Accepted Answer

A)  1970 and lowest in 1980. 
B)  1970 and lowest in 1990. 
C)  1980 and lowest in 1970. 
D)  1980 and lowest in 1990. 
A)  1970 and lowest in 1980. 
B)  1970 and lowest in 1990. 
C)  1980 and lowest in 1970. 
D)  1980 and lowest in 1990.

Question 11

The CPI and the GDP deflator

Accepted Answer

A)  generally move together. 
B)  generally show different patterns of movement. 
C)  always show identical changes. 
D)  always show different patterns of movement. 
A)  generally move together. 
B)  generally show different patterns of movement. 
C)  always show identical changes. 
D)  always show different patterns of movement.

Question 12

Persistent increases in the overall level of prices have been the norm.

Accepted Answer

A) True 
 B)False

Question 13

The CPI is a measure of the overall cost of the goods and services bought by a typical consumer.

Accepted Answer

A) True 
 B)False

Question 14

If the nominal interest rate is 4 percent and the real interest rate is 7 percent, then the inflation rate is

Accepted Answer

A)  -3 percent. 
B)  0.75 percent. 
C)  3 percent. 
D)  11 percent. 
A)  -3 percent. 
B)  0.75 percent. 
C)  3 percent. 
D)  11 percent.

Question 15

Table 24-12. Will's expenditures on food for three consecutive years, along with other values, are presented in the table below.
  
-Refer to Table 24-12. If the nominal interest rate was 8 percent in 2010, then

Accepted Answer

A)  the real interest rate in 2010 was 3 percent. 
B)  the real interest rate in 2010 was 4 percent. 
C)  Will's 2009 food expenditures in 2010 dollars amount to $5,800. 
D)  Will's 2009 food expenditures in 2011 dollars amount to $6,200. 
A)  the real interest rate in 2010 was 3 percent. 
B)  the real interest rate in 2010 was 4 percent. 
C)  Will's 2009 food expenditures in 2010 dollars amount to $5,800. 
D)  Will's 2009 food expenditures in 2011 dollars amount to $6,200.

Question 16

If the nominal interest rate is 6 percent and the rate of inflation is 2 percent, then the real interest rate is

Accepted Answer

A)  -4 percent. 
B)  3 percent. 
C)  4 percent. 
D)  8 percent. 
A)  -4 percent. 
B)  3 percent. 
C)  4 percent. 
D)  8 percent.

Question 17

Scenario 24-6
A small economy produced and consumed goods X and Y in 2010 and 2011 in the amounts shown in the table below. Assume that the market basket for the CPI is defined in the base year.
  
-Refer to Scenario 24-6. Using 2010 as the base year, what is the CPI in each year?

Accepted Answer

The CPI is

Question 18

In 1974, one could buy a theater for $1.25. Today the same theater ticket costs $6.50. Which pair of CPIs would imply that the cost in today's dollars was the same for both tickets?

Accepted Answer

A)  60 in 1964 and 390 today 
B)  75 in 1964 and 390 today 
C)  80 in 1964 and 404 today 
D)  95 in 1964 and 475 today 
A)  60 in 1964 and 390 today 
B)  75 in 1964 and 390 today 
C)  80 in 1964 and 404 today 
D)  95 in 1964 and 475 today

Question 19

In the basket of goods that is used to compute the consumer price index, which of the following categories of consumer spending is the smallest?

Accepted Answer

A)  education & communication 
B)  apparel 
C)  medical care 
D)  recreation 
A)  education & communication 
B)  apparel 
C)  medical care 
D)  recreation

Question 20

If the real value of an item bought ten years ago is less than it's nominal value at that time, what can one infer about the change in the overall price level during this ten year period?

Accepted Answer

One can infer that t

If the CPI was 120 in 1994, was 126 in 1995, and was 134.82 in 1996, what was the inflation rate in 1995 and in 1996?

There is no longer much debate among economists concerning the severity of and the solution to the problems in using the CPI to measure the cost of living.

In 1986, Ken bought a Ford Mustang for $8,000. If the price index was 122 in 1986 and the price index was 280 in 2011, then what is the price of the Mustang in 2011 dollars?

From 2013 to 2014, the CPI for medical care increased from 150 to 159. What was the inflation rate for medical care?

Table 24-10 The table below shows the prices of baseballs and baseball bats for three years. Assume the typical consumer's basket consists of 6 baseballs and 2 baseball bats. -Refer to Table 24-10. If 2010 is the base year, then the consumer price index was

Table 24-5 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 24-5. If the base year is 2004, then the CPI in 2005 was

Table 24-1 The table below lists annual consumer price index and inflation rates for a country over the period 2005-2010. Assume the year 2005 is used as the base year. -Refer to Table 24-1. What belongs in space E?

For an imaginary economy, the consumer price index was 80 in 2014, 100 in 2015, and 140 in 2016. Which of the following statements is correct?

Suppose that the price of one gallon of milk was $0.25 in 1950, that the CPI in 1950 was 25, and that in 2000 the CPI was 200.What is the price of a 1950 gallon of milk in 2000 dollars?

In 1970, Professor Plum earned $12,000; in 1980, he earned $24,000; and in 1990, he earned $36,000. If the CPI was 40 in 1970, 70 in 1980, and 130 in 1990, then in real terms, Professor Plum's salary was highest in

The CPI and the GDP deflator

Persistent increases in the overall level of prices have been the norm.

The CPI is a measure of the overall cost of the goods and services bought by a typical consumer.

If the nominal interest rate is 4 percent and the real interest rate is 7 percent, then the inflation rate is

Table 24-12. Will's expenditures on food for three consecutive years, along with other values, are presented in the table below. -Refer to Table 24-12. If the nominal interest rate was 8 percent in 2010, then

If the nominal interest rate is 6 percent and the rate of inflation is 2 percent, then the real interest rate is

Scenario 24-6 A small economy produced and consumed goods X and Y in 2010 and 2011 in the amounts shown in the table below. Assume that the market basket for the CPI is defined in the base year. -Refer to Scenario 24-6. Using 2010 as the base year, what is the CPI in each year?

In 1974, one could buy a theater for $1.25. Today the same theater ticket costs $6.50. Which pair of CPIs would imply that the cost in today's dollars was the same for both tickets?

In the basket of goods that is used to compute the consumer price index, which of the following categories of consumer spending is the smallest?

If the real value of an item bought ten years ago is less than it's nominal value at that time, what can one infer about the change in the overall price level during this ten year period?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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Exam 6: Measuring the Cost of Living

If the CPI was 120 in 1994, was 126 in 1995, and was 134.82 in 1996, what was the inflation rate in 1995 and in 1996?

There is no longer much debate among economists concerning the severity of and the solution to the problems in using the CPI to measure the cost of living.

In 1986, Ken bought a Ford Mustang for $8,000. If the price index was 122 in 1986 and the price index was 280 in 2011, then what is the price of the Mustang in 2011 dollars?

From 2013 to 2014, the CPI for medical care increased from 150 to 159. What was the inflation rate for medical care?

Table 24-10 The table below shows the prices of baseballs and baseball bats for three years. Assume the typical consumer's basket consists of 6 baseballs and 2 baseball bats. -Refer to Table 24-10. If 2010 is the base year, then the consumer price index was

Table 24-5 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 24-5. If the base year is 2004, then the CPI in 2005 was

Table 24-1 The table below lists annual consumer price index and inflation rates for a country over the period 2005-2010. Assume the year 2005 is used as the base year. -Refer to Table 24-1. What belongs in space E?

For an imaginary economy, the consumer price index was 80 in 2014, 100 in 2015, and 140 in 2016. Which of the following statements is correct?

Suppose that the price of one gallon of milk was $0.25 in 1950, that the CPI in 1950 was 25, and that in 2000 the CPI was 200.What is the price of a 1950 gallon of milk in 2000 dollars?

In 1970, Professor Plum earned $12,000; in 1980, he earned $24,000; and in 1990, he earned $36,000. If the CPI was 40 in 1970, 70 in 1980, and 130 in 1990, then in real terms, Professor Plum's salary was highest in

The CPI and the GDP deflator

Persistent increases in the overall level of prices have been the norm.

The CPI is a measure of the overall cost of the goods and services bought by a typical consumer.

If the nominal interest rate is 4 percent and the real interest rate is 7 percent, then the inflation rate is

Table 24-12. Will's expenditures on food for three consecutive years, along with other values, are presented in the table below. -Refer to Table 24-12. If the nominal interest rate was 8 percent in 2010, then

If the nominal interest rate is 6 percent and the rate of inflation is 2 percent, then the real interest rate is

Scenario 24-6 A small economy produced and consumed goods X and Y in 2010 and 2011 in the amounts shown in the table below. Assume that the market basket for the CPI is defined in the base year. -Refer to Scenario 24-6. Using 2010 as the base year, what is the CPI in each year?

In 1974, one could buy a theater for $1.25. Today the same theater ticket costs $6.50. Which pair of CPIs would imply that the cost in today's dollars was the same for both tickets?

In the basket of goods that is used to compute the consumer price index, which of the following categories of consumer spending is the smallest?

If the real value of an item bought ten years ago is less than it's nominal value at that time, what can one infer about the change in the overall price level during this ten year period?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring a Nations Income

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters