Exam 11: Measuring the Cost of Living

The group of goods and services used to compute the GDP deflator changes automatically over time, but the group of goods and services used to compute the CPI does not.

The introduction of a new good

If the nominal interest rate is 4 percent and the real interest rate is -2.5 percent, then the inflation rate is

In computing the consumer price index, a base year is chosen. Which of the following statements about the base year is correct?

Suppose that over the past year, the real interest rate was 3 percent, the CPI was 126.2 at the beginning of the year, and the CPI was 129.5 at the end of the year. It follows that

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

The CPI and the GDP deflator

For a country like the United States, explain why the CPI would increase at a faster rate than the GDP deflator during periods of oil and gasoline price increases.

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. The inflation rate was

Which of the following is the correct formula for calculating the inflation rate?

For an imaginary economy, the value of the consumer price index was 140 in 2013, and the inflation rate was 5.0 percent between 2013 and 2014. The consumer price index in 2014 was

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

Table 24-4 The table below pertains to Studious, an economy in which the typical consumer's basket consists of 5 books and 10 calculators. -Refer to Table 24-4. The inflation rate was

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

During a certain year, the consumer price index increased from 120 to 132 and the purchasing power of a person's bank account increased by 4 percent. For that year,

Suppose the Tooth Fairy paid 50 cents for a tooth in 1970. The CPI in 1970 was 38.8, while the CPI in 2010 was 218.1. What is the value of the Tooth Fairy's payment in 2010 dollars?

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?

For any given year, the CPI is the price of the basket of goods and services in the

If the cost of transportation increases by 20 percent, then, other things the same, the CPI is likely to increase by about

The consumer price index was 200 in 2012 and 208 in 2013. The nominal interest rate during this period was 9 percent. What was the real interest rate during this period?