Question 1

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

Accepted Answer

A)  shelter. 
B)  fuel and other utilities. 
C)  household furnishings and operation. 
D)  All of the above are correct. 
A)  shelter. 
B)  fuel and other utilities. 
C)  household furnishings and operation. 
D)  All of the above are correct.

Question 2

Suppose that the price of one ear of corn was $0.05 in 1920, that the CPI in 1920 was 10, and that in 1990 the CPI was 180. What is the price of a 1920 ear of corn in 1990 dollars?

Accepted Answer

The price of a 1920

Question 3

The economy's inflation rate is the

Accepted Answer

A)  price level in the current period. 
B)  change in the price level from the previous period. 
C)  change in the gross domestic product from the previous period. 
D)  percentage change in the price level from the previous period. 
A)  price level in the current period. 
B)  change in the price level from the previous period. 
C)  change in the gross domestic product from the previous period. 
D)  percentage change in the price level from the previous period.

Question 4

When looking at a graph of nominal and real interest rates you notice the graph for nominal rates and the graph for real rates cross each other many times. From this you conclude

Accepted Answer

A)  consumer prices sometimes rose and sometimes fell in the time frame represented on the graph. 
B)  consumer prices were always rising in the time frame represented on the graph. 
C)  the economy never experienced a recession in the time frame represented on the graph. 
D)  GDP was always increasing for the time frame represented on the graph. 
A)  consumer prices sometimes rose and sometimes fell in the time frame represented on the graph. 
B)  consumer prices were always rising in the time frame represented on the graph. 
C)  the economy never experienced a recession in the time frame represented on the graph. 
D)  GDP was always increasing for the time frame represented on the graph.

Question 5

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 7 percent during the year the money was deposited, then Bob's purchasing power has increased by 2 percent.

Accepted Answer

A) True 
 B)False

Question 6

Changes in the consumer price index are useful in predicting changes in the producer price index.

Accepted Answer

A) True 
 B)False

Question 7

When looking at a graph of nominal and real interest rates you notice that nominal rates always lie above real rates. From this you conclude

Accepted Answer

A)  there were serious episodes of deflation in the time frame represented on the graph. 
B)  consumer prices were always rising in the time frame represented on the graph. 
C)  the economy never experienced a recession in the time frame represented on the graph. 
D)  GDP was always increasing for the time frame represented on the graph. 
A)  there were serious episodes of deflation in the time frame represented on the graph. 
B)  consumer prices were always rising in the time frame represented on the graph. 
C)  the economy never experienced a recession in the time frame represented on the graph. 
D)  GDP was always increasing for the time frame represented on the graph.

Question 8

In 1949, Sycamore, Illinois built a hospital for about $500,000. In 1987, the county restored the courthouse for about $2.4 million. A price index for nonresidential construction was 14 in 1949, 92 in 1987, and 114.5 in 2000. According to these numbers, the hospital cost about

Accepted Answer

A)  $3.6 million in 2000 dollars, which is less than the cost of the courthouse restoration in 2000 dollars. 
B)  $3.6 million in 2000 dollars, which is more than the cost of the courthouse restoration in 2000 dollars. 
C)  $4.1 million in 2000 dollars, which is less than the cost of the courthouse restoration in 2000 dollars. 
D)  $4.1 million in 2000 dollars, which is more than the cost of the courthouse restoration in 2000 dollars. 
A)  $3.6 million in 2000 dollars, which is less than the cost of the courthouse restoration in 2000 dollars. 
B)  $3.6 million in 2000 dollars, which is more than the cost of the courthouse restoration in 2000 dollars. 
C)  $4.1 million in 2000 dollars, which is less than the cost of the courthouse restoration in 2000 dollars. 
D)  $4.1 million in 2000 dollars, which is more than the cost of the courthouse restoration in 2000 dollars.

Question 9

The CPI is more commonly used as a gauge of inflation than the GDP deflator is because

Accepted Answer

A)  the CPI is easier to measure. 
B)  the CPI is calculated more often than the GDP deflator is. 
C)  the CPI better reflects the goods and services bought by consumers. 
D)  the GDP deflator cannot be used to gauge inflation. 
A)  the CPI is easier to measure. 
B)  the CPI is calculated more often than the GDP deflator is. 
C)  the CPI better reflects the goods and services bought by consumers. 
D)  the GDP deflator cannot be used to gauge inflation.

Question 10

Table 24-15
The table below lists the prices of chips and salsa for the months of October, November, and December. Assume that the typical consumer buys 8 bags of chips and 4 jars of salsa each month, and that October is the base period.
  
-Refer to Table 24-15. Calculate the inflation rate for December.

Accepted Answer

The answer of Table 24-15
The table below lists the prices...

Question 11

If the nominal interest rate is 5 percent and the inflation rate is 2 percent, then the real interest rate is 7 percent.

Accepted Answer

A) True 
 B)False

Question 12

In the CPI, goods and services are weighted according to

Accepted Answer

A)  how long a market has existed for each good or service. 
B)  the extent to which each good or service is regarded by the government as a necessity. 
C)  how much consumers buy of each good or service. 
D)  the number of firms that produce and sell each good or service. 
A)  how long a market has existed for each good or service. 
B)  the extent to which each good or service is regarded by the government as a necessity. 
C)  how much consumers buy of each good or service. 
D)  the number of firms that produce and sell each good or service.

Question 13

The CPI was 96 in 1982, and the CPI was 230 in 2012. How much money would you have needed in 2012 in order to buy what you could have bought with $500 in 1982?

Accepted Answer

A)  $208.96 
B)  $1,197.92 
C)  $697.92 
D)  $1,697.92 
A)  $208.96 
B)  $1,197.92 
C)  $697.92 
D)  $1,697.92

Question 14

Table 24-3
The table below pertains to Iowan, an economy in which the typical consumer's basket consists of 4 pounds of pork and 3 bushels of corn.
  
-Refer to Table 24-3. If 2012 is the base year, then the CPI for 2013 was

Accepted Answer

A)  100.0. 
B)  116.0. 
C)  132.8. 
D)  154.0. 
A)  100.0. 
B)  116.0. 
C)  132.8. 
D)  154.0.

Question 15

Table 24-13. Olivia's expenditures on clothing for three consecutive years, along with some values for the CPI, are presented in the table below.
  
-Refer to Table 24-13. To the nearest dollar, how much is Olivia's 2010 clothing expenditure in 2011 dollars?

Accepted Answer

A)  $1,683 
B)  $1,778 
C)  $1,800 
D)  $3,600 
A)  $1,683 
B)  $1,778 
C)  $1,800 
D)  $3,600

Question 16

For an imaginary economy, the value of the consumer price index was 138.75 in 2016, and the inflation rate was 10 percent between 2015 and 2016. The consumer price index in 2015 was

Accepted Answer

A)  126.1. 
B)  128.8. 
C)  148.8. 
D)  152.6. 
A)  126.1. 
B)  128.8. 
C)  148.8. 
D)  152.6.

Question 17

Write the formula for computing the cost of a basket of goods in a given period assuming you only have two goods, X and Y, which are bought in quantities Qx and Qy, and sold at prices of Px and Py.

Accepted Answer

The answer of Write the formula for computing the cost...

Question 18

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 2013 is the base year, then the CPI for 2012 was

Accepted Answer

A)  95.7. 
B)  100.0. 
C)  90.0. 
D)  213.6. 
A)  95.7. 
B)  100.0. 
C)  90.0. 
D)  213.6.

Question 19

Scenario 24-5
Suppose the residents of Mediaville spend all of their income on books, CDs, and DVDs. In 2009, they buy 400 books for $3,200, 200 CDs for $1,400, and 100 DVDs for $900. In 2010, they buy 360 books for $3,240, 250 CDs for $1,500, and 125 DVDs for $1,250. Assume that the market basket for the CPI is defined in the base year.
-Refer to Scenario 24-5. What are the prices of books, CDs, and DVDs in 2009?

Accepted Answer

In 2009, books are $

Question 20

Harry spent $39,000 in 2009 and $42,000 in 2014 on goods and services. The consumer price index was 220 for 2009 and 231 for 2014. Harry's 2014 spending in 2009 dollars is about

Accepted Answer

A)  $40,000. 
B)  $44,100. 
C)  $37,838. 
D)  $40,091. 
A)  $40,000. 
B)  $44,100. 
C)  $37,838. 
D)  $40,091.

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

Suppose that the price of one ear of corn was $0.05 in 1920, that the CPI in 1920 was 10, and that in 1990 the CPI was 180. What is the price of a 1920 ear of corn in 1990 dollars?

The economy's inflation rate is the

When looking at a graph of nominal and real interest rates you notice the graph for nominal rates and the graph for real rates cross each other many times. From this you conclude

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 7 percent during the year the money was deposited, then Bob's purchasing power has increased by 2 percent.

Changes in the consumer price index are useful in predicting changes in the producer price index.

When looking at a graph of nominal and real interest rates you notice that nominal rates always lie above real rates. From this you conclude

In 1949, Sycamore, Illinois built a hospital for about $500,000. In 1987, the county restored the courthouse for about $2.4 million. A price index for nonresidential construction was 14 in 1949, 92 in 1987, and 114.5 in 2000. According to these numbers, the hospital cost about

The CPI is more commonly used as a gauge of inflation than the GDP deflator is because

If the nominal interest rate is 5 percent and the inflation rate is 2 percent, then the real interest rate is 7 percent.

In the CPI, goods and services are weighted according to

The CPI was 96 in 1982, and the CPI was 230 in 2012. How much money would you have needed in 2012 in order to buy what you could have bought with $500 in 1982?

Table 24-3 The table below pertains to Iowan, an economy in which the typical consumer's basket consists of 4 pounds of pork and 3 bushels of corn. -Refer to Table 24-3. If 2012 is the base year, then the CPI for 2013 was

Table 24-13. Olivia's expenditures on clothing for three consecutive years, along with some values for the CPI, are presented in the table below. -Refer to Table 24-13. To the nearest dollar, how much is Olivia's 2010 clothing expenditure in 2011 dollars?

For an imaginary economy, the value of the consumer price index was 138.75 in 2016, and the inflation rate was 10 percent between 2015 and 2016. The consumer price index in 2015 was

Write the formula for computing the cost of a basket of goods in a given period assuming you only have two goods, X and Y, which are bought in quantities Qx and Qy, and sold at prices of Px and Py.

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 2013 is the base year, then the CPI for 2012 was

Harry spent $39,000 in 2009 and $42,000 in 2014 on goods and services. The consumer price index was 220 for 2009 and 231 for 2014. Harry's 2014 spending in 2009 dollars is about

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

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

Suppose that the price of one ear of corn was $0.05 in 1920, that the CPI in 1920 was 10, and that in 1990 the CPI was 180. What is the price of a 1920 ear of corn in 1990 dollars?

The economy's inflation rate is the

When looking at a graph of nominal and real interest rates you notice the graph for nominal rates and the graph for real rates cross each other many times. From this you conclude

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 7 percent during the year the money was deposited, then Bob's purchasing power has increased by 2 percent.

Changes in the consumer price index are useful in predicting changes in the producer price index.

When looking at a graph of nominal and real interest rates you notice that nominal rates always lie above real rates. From this you conclude

In 1949, Sycamore, Illinois built a hospital for about $500,000. In 1987, the county restored the courthouse for about $2.4 million. A price index for nonresidential construction was 14 in 1949, 92 in 1987, and 114.5 in 2000. According to these numbers, the hospital cost about

The CPI is more commonly used as a gauge of inflation than the GDP deflator is because

If the nominal interest rate is 5 percent and the inflation rate is 2 percent, then the real interest rate is 7 percent.

In the CPI, goods and services are weighted according to

The CPI was 96 in 1982, and the CPI was 230 in 2012. How much money would you have needed in 2012 in order to buy what you could have bought with $500 in 1982?

Table 24-3 The table below pertains to Iowan, an economy in which the typical consumer's basket consists of 4 pounds of pork and 3 bushels of corn. -Refer to Table 24-3. If 2012 is the base year, then the CPI for 2013 was

Table 24-13. Olivia's expenditures on clothing for three consecutive years, along with some values for the CPI, are presented in the table below. -Refer to Table 24-13. To the nearest dollar, how much is Olivia's 2010 clothing expenditure in 2011 dollars?

For an imaginary economy, the value of the consumer price index was 138.75 in 2016, and the inflation rate was 10 percent between 2015 and 2016. The consumer price index in 2015 was

Write the formula for computing the cost of a basket of goods in a given period assuming you only have two goods, X and Y, which are bought in quantities Qx and Qy, and sold at prices of Px and Py.

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 2013 is the base year, then the CPI for 2012 was

Harry spent $39,000 in 2009 and $42,000 in 2014 on goods and services. The consumer price index was 220 for 2009 and 231 for 2014. Harry's 2014 spending in 2009 dollars is about

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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