Exam 16: Measuring the Cost of Living

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?

Ethel purchased a bag of groceries in 1970 for $8. She purchased the same bag of groceries in 2006 for $25. If the price index was 38.8 in 1970 and the price index was 180 in 2006, then what is the price of the 1970 bag of groceries in 2006 dollars?

Which of the following statements about real and nominal interest rates is correct?

Ms. Lane borrowed $1,000 from her bank for one year at an interest rate of 10 percent. During that year, the price level went up by 15 percent. Which of the following statements is correct?

Consider a small economy in which consumers buy only two goods: pretzels and cookies. In order to compute the consumer price index for this economy for two or more consecutive years, we assume that

Which of the following agencies calculates the CPI?

Table 24-14 The table below lists the per pound prices of meat and potatoes for the months of January, February, and March. Assume that the typical consumer buys 25 pounds of meat and 15 pounds of potatoes each month, and that January is the base period. -Refer to Table 24-14. Calculate the cost of a basket of goods for each month.

If the nominal interest rate is 8 percent and the real interest rate is 5.5 percent, then the inflation rate is

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.

Suppose that the prices of dairy products have risen relatively less than prices in general over the last several years. To which problem in the construction of the CPI is this situation most relevant?

Table 24-8 The table below relates to the economy of Mainland, where the typical consumer's market basket consists of 2 televisions and 300 hamburgers. -Refer to Table 24-8. If the base year is 2014, then the consumer price index was

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 amounted to $5,670. Suppose also that the real interest rate in 2011 was 3 percent. Then, in 2011,

The consumer price index tires to measure how much consumer incomes must rise in order to maintain a constant

An increase in the price of imported coffee shows up

In the United States, if the price of imported oil rises so that the prices of gasoline and heating oil rise, then the

Compute how much each of the following items is worth in terms of today's dollars using 177 as the price index for today. a. In 1926, the CPI was 17.7 and the price of a movie ticket was $0.25. b. In 1932, the CPI was 13.1 and a cook earned $15.00 a week. c. In 1943, the CPI was 17.4 and a gallon of gas cost $0.19.

If the quality of a good deteriorates from one year to the next while its price remains the same, then the value of a dollar falls.

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. How much was the cost of the basket in 2008?

When consumer spending is broken down into the major categories of goods and services, the largest single category is spending on transportation.

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. The cost of the basket in 2006 was