Question 1

Which is likely to have the larger effect on the CPI, a 2 percent increase in the price of food or a 3 percent increase in the price of diamond rings? Explain.

Accepted Answer

The 2 percent increase in the

Question 2

The inflation rate is defined as the

Accepted Answer

A)  price level in an economy. 
B)  change in the price level from one period to the next. 
C)  percentage change in the price level from the previous period. 
D)  price level minus the price level from the previous period. 
A)  price level in an economy. 
B)  change in the price level from one period to the next. 
C)  percentage change in the price level from the previous period. 
D)  price level minus the price level from the previous period.

Question 3

Suppose the nominal interest rate this year is 6.5% and that the economy experiences 2.3% deflation. What is the real interest rate?

Accepted Answer

The real i

Question 4

The substitution bias in the consumer price index refers to the

Accepted Answer

A)  substitution by consumers toward new goods and away from old goods. 
B)  substitution by consumers toward a smaller number of high-quality goods and away from a larger number of low-quality goods. 
C)  substitution by consumers toward goods that have become relatively less expensive and away from goods that have become relatively more expensive. 
D)  substitution of new prices for old prices in the CPI basket of goods and services from one year to the next. 
A)  substitution by consumers toward new goods and away from old goods. 
B)  substitution by consumers toward a smaller number of high-quality goods and away from a larger number of low-quality goods. 
C)  substitution by consumers toward goods that have become relatively less expensive and away from goods that have become relatively more expensive. 
D)  substitution of new prices for old prices in the CPI basket of goods and services from one year to the next.

Question 5

A worker received $5 for a daily wage in 1930, which has the equivalent value of $63.24 today. If the CPI was 17 in 1930 what is the value of the CPI today, rounded to the nearest whole number?

Accepted Answer

A)  215 
B)  134 
C)  17 
D)  1.3 
A)  215 
B)  134 
C)  17 
D)  1.3

Question 6

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. Suppose Will's 2009 food expenditures in 2011 dollars amount to $5,750. Then the inflation rate for 2011 is about

Accepted Answer

A)  9.08 percent. 
B)  9.52 percent. 
C)  10.24 percent. 
D)  10.78 percent. 
A)  9.08 percent. 
B)  9.52 percent. 
C)  10.24 percent. 
D)  10.78 percent.

Question 7

When box office receipts are corrected for inflation, the most popular movie of all time is

Accepted Answer

A)  Star Wars. 
B)  Titanic. 
C)  Gone With the Wind. 
D)  The Sound of Music. 
A)  Star Wars. 
B)  Titanic. 
C)  Gone With the Wind. 
D)  The Sound of Music.

Question 8

What do real interest rates account for that nominal interest rates do not?

Accepted Answer

Unlike nominal interest rates,

Question 9

The term inflation is used to describe a situation in which

Accepted Answer

A)  the overall level of prices in the economy is increasing. 
B)  incomes in the economy are increasing. 
C)  stock-market prices are rising. 
D)  the economy is growing rapidly. 
A)  the overall level of prices in the economy is increasing. 
B)  incomes in the economy are increasing. 
C)  stock-market prices are rising. 
D)  the economy is growing rapidly.

Question 10

The consumer price index is used to

Accepted Answer

A)  convert nominal GDP into real GDP. 
B)  turn dollar figures into meaningful measures of purchasing power. 
C)  characterize the types of goods and services that consumers purchase. 
D)  measure the quantity of goods and services that the economy produces. 
A)  convert nominal GDP into real GDP. 
B)  turn dollar figures into meaningful measures of purchasing power. 
C)  characterize the types of goods and services that consumers purchase. 
D)  measure the quantity of goods and services that the economy produces.

Question 11

Scenario 24-3
Sue Holloway was an accountant in 1944 and earned $12,000 that year. Her son, Josh Holloway, is an accountant today and he earned $210,000 in 2013. The price index was 17.6 in 1944 and 218.4 in 2013.
-Refer to Scenario 24-3. Josh Holloway's 2013 income in 1944 dollars is

Accepted Answer

A)  $11,528. 
B)  $16,923. 
C)  $149,009. 
D)  $26,059. 
A)  $11,528. 
B)  $16,923. 
C)  $149,009. 
D)  $26,059.

Question 12

If the CPI was 110 this year and 100 last year, then

Accepted Answer

A)  the cost of the CPI basket of goods and services increased by 10 percent this year. 
B)  the price level increased by 110 percent this year. 
C)  the inflation rate for this year was 10 percent higher than the inflation rate for last year. 
D)  All of the above are correct. 
A)  the cost of the CPI basket of goods and services increased by 10 percent this year. 
B)  the price level increased by 110 percent this year. 
C)  the inflation rate for this year was 10 percent higher than the inflation rate for last year. 
D)  All of the above are correct.

Question 13

Write the formula for finding the rate of inflation in 2011 if you have only the CPI for the years 2010, 2011, and 2012.

Accepted Answer

The answer of Write the formula for finding the rate...

Question 14

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

Accepted Answer

A)  subways. 
B)  gasoline. 
C)  both subways and gasoline. 
D)  neither subways nor gasoline. 
A)  subways. 
B)  gasoline. 
C)  both subways and gasoline. 
D)  neither subways nor gasoline.

Question 15

The consumer price index was 225 in 2008 and 232.2 in 2009. The nominal interest rate during this period was 6.5 percent. What was the real interest rate during this period?

Accepted Answer

A)  1.6 percent 
B)  3.3 percent 
C)  5.1 percent 
D)  7.4 percent 
A)  1.6 percent 
B)  3.3 percent 
C)  5.1 percent 
D)  7.4 percent

Question 16

The inflation rate is the absolute change in the price level from the previous period.

Accepted Answer

A) True 
 B)False

Question 17

Table 24-2
The table below pertains to Pieway, an economy in which the typical consumer's basket consists of 15 bushels of peaches and 10 bushels of pecans.
  
-Refer to Table 24-2. If 2012 is the base year, then the CPI for 2013 was

Accepted Answer

A)  95.7. 
B)  100.0. 
C)  104.4. 
D)  110.0. 
A)  95.7. 
B)  100.0. 
C)  104.4. 
D)  110.0.

Question 18

Suppose that the CPI in 1990 was 150, that the inflation rate in 1991 was 6%, and that the inflation rate in 1992 was 4%. What was the CPI in 1991 and 1992?

Accepted Answer

The CPI in 1991 was

Question 19

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

Accepted Answer

A)  1.5 percent. 
B)  7.5 percent. 
C)  10 percent. 
D)  20 percent. 
A)  1.5 percent. 
B)  7.5 percent. 
C)  10 percent. 
D)  20 percent.

Question 20

During a certain year, the nominal interest rate was 7 percent, the real interest rate was 4 percent, and the CPI was 198.3 at the end of the year. The CPI at the beginning of the year was

Accepted Answer

A)  204.2 
B)  192.5 
C)  178.6 
D)  220.1 
A)  204.2 
B)  192.5 
C)  178.6 
D)  220.1

Which is likely to have the larger effect on the CPI, a 2 percent increase in the price of food or a 3 percent increase in the price of diamond rings? Explain.

The inflation rate is defined as the

Suppose the nominal interest rate this year is 6.5% and that the economy experiences 2.3% deflation. What is the real interest rate?

The substitution bias in the consumer price index refers to the

A worker received $5 for a daily wage in 1930, which has the equivalent value of $63.24 today. If the CPI was 17 in 1930 what is the value of the CPI today, rounded to the nearest whole number?

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. Suppose Will's 2009 food expenditures in 2011 dollars amount to $5,750. Then the inflation rate for 2011 is about

When box office receipts are corrected for inflation, the most popular movie of all time is

What do real interest rates account for that nominal interest rates do not?

The term inflation is used to describe a situation in which

The consumer price index is used to

Scenario 24-3 Sue Holloway was an accountant in 1944 and earned $12,000 that year. Her son, Josh Holloway, is an accountant today and he earned $210,000 in 2013. The price index was 17.6 in 1944 and 218.4 in 2013. -Refer to Scenario 24-3. Josh Holloway's 2013 income in 1944 dollars is

If the CPI was 110 this year and 100 last year, then

Write the formula for finding the rate of inflation in 2011 if you have only the CPI for the years 2010, 2011, and 2012.

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

The consumer price index was 225 in 2008 and 232.2 in 2009. The nominal interest rate during this period was 6.5 percent. What was the real interest rate during this period?

The inflation rate is the absolute change in the price level from the previous period.

Table 24-2 The table below pertains to Pieway, an economy in which the typical consumer's basket consists of 15 bushels of peaches and 10 bushels of pecans. -Refer to Table 24-2. If 2012 is the base year, then the CPI for 2013 was

Suppose that the CPI in 1990 was 150, that the inflation rate in 1991 was 6%, and that the inflation rate in 1992 was 4%. What was the CPI in 1991 and 1992?

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

During a certain year, the nominal interest rate was 7 percent, the real interest rate was 4 percent, and the CPI was 198.3 at the end of the year. The CPI at the beginning of the year was

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

Which is likely to have the larger effect on the CPI, a 2 percent increase in the price of food or a 3 percent increase in the price of diamond rings? Explain.

The inflation rate is defined as the

Suppose the nominal interest rate this year is 6.5% and that the economy experiences 2.3% deflation. What is the real interest rate?

The substitution bias in the consumer price index refers to the

A worker received $5 for a daily wage in 1930, which has the equivalent value of $63.24 today. If the CPI was 17 in 1930 what is the value of the CPI today, rounded to the nearest whole number?

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. Suppose Will's 2009 food expenditures in 2011 dollars amount to $5,750. Then the inflation rate for 2011 is about

When box office receipts are corrected for inflation, the most popular movie of all time is

What do real interest rates account for that nominal interest rates do not?

The term inflation is used to describe a situation in which

The consumer price index is used to

Scenario 24-3 Sue Holloway was an accountant in 1944 and earned $12,000 that year. Her son, Josh Holloway, is an accountant today and he earned $210,000 in 2013. The price index was 17.6 in 1944 and 218.4 in 2013. -Refer to Scenario 24-3. Josh Holloway's 2013 income in 1944 dollars is

If the CPI was 110 this year and 100 last year, then

Write the formula for finding the rate of inflation in 2011 if you have only the CPI for the years 2010, 2011, and 2012.

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

The consumer price index was 225 in 2008 and 232.2 in 2009. The nominal interest rate during this period was 6.5 percent. What was the real interest rate during this period?

The inflation rate is the absolute change in the price level from the previous period.

Table 24-2 The table below pertains to Pieway, an economy in which the typical consumer's basket consists of 15 bushels of peaches and 10 bushels of pecans. -Refer to Table 24-2. If 2012 is the base year, then the CPI for 2013 was

Suppose that the CPI in 1990 was 150, that the inflation rate in 1991 was 6%, and that the inflation rate in 1992 was 4%. What was the CPI in 1991 and 1992?

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

During a certain year, the nominal interest rate was 7 percent, the real interest rate was 4 percent, and the CPI was 198.3 at the end of the year. The CPI at the beginning of the year was

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