Question 1

The purpose of measuring the overall level of prices in the economy is to permit comparison between dollar figures from different times.

Accepted Answer

A) True 
 B)False

Question 2

Why does the GDP deflator give a different rate of inflation than the CPI?

Accepted Answer

The GDP deflator and the CPI differ in t

Question 3

If the CPI was 108.00 in 1942 and is 336.96 today, then $10 in 1942 purchased the same amount of goods and services as

Accepted Answer

A)  $2.57 purchases today. 
B)  $28.89 purchases today. 
C)  $31.20 purchases today. 
D)  $38.89 purchases today. 
A)  $2.57 purchases today. 
B)  $28.89 purchases today. 
C)  $31.20 purchases today. 
D)  $38.89 purchases today.

Question 4

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 5

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 2009 spending in 2014 dollars is about

Accepted Answer

A)  $43,290. 
B)  $37,143. 
C)  $40,950. 
D)  $40,857. 
A)  $43,290. 
B)  $37,143. 
C)  $40,950. 
D)  $40,857.

Question 6

The Bureau of Labor Statistics is part of the U.S. Department of Labor.

Accepted Answer

A) True 
 B)False

Question 7

Marion collected Social Security payments of $250 a month in 1985. If the price index rose from 90 to 108 between 1985 and 1986, then her Social Security payments for 1986 should have been

Accepted Answer

A)  $268. 
B)  $292. 
C)  $300. 
D)  $358. 
A)  $268. 
B)  $292. 
C)  $300. 
D)  $358.

Question 8

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 cost of the basket

Accepted Answer

A)  increased from 2012 to 2013 and increased from 2013 to 2014. 
B)  increased from 2012 to 2013 and decreased from 2013 to 2014. 
C)  decreased from 2012 to 2013 and increased from 2013 to 2014. 
D)  decreased from 2012 to 2013 and decreased from 2013 to 2014. 
A)  increased from 2012 to 2013 and increased from 2013 to 2014. 
B)  increased from 2012 to 2013 and decreased from 2013 to 2014. 
C)  decreased from 2012 to 2013 and increased from 2013 to 2014. 
D)  decreased from 2012 to 2013 and decreased from 2013 to 2014.

Question 9

Suppose a basket of goods and services has been selected to calculate the CPI and 2012 has been chosen as the base year. In 2012, the basket's cost was $80.00; in 2013, the basket's cost was $84; and in 2014, the basket's cost was $87.60. The value of the CPI was

Accepted Answer

A)  100 in 2012. 
B)  105 in 2013. 
C)  109.5 in 2014. 
D)  All of the above are correct. 
A)  100 in 2012. 
B)  105 in 2013. 
C)  109.5 in 2014. 
D)  All of the above are correct.

Question 10

If the cost of apparel increases by 50 percent, then, other things the same, the CPI is likely to increase by about

Accepted Answer

A)  0.5 percent. 
B)  2.0 percent. 
C)  3.0 percent. 
D)  11.8 percent. 
A)  0.5 percent. 
B)  2.0 percent. 
C)  3.0 percent. 
D)  11.8 percent.

Question 11

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 12

Wilson is offered a job in Kansas City that pays $50,000 and a job in Dallas that pays $60,000. Which pair of CPIs would ensure that the two salaries have the same purchasing power?

Accepted Answer

A)  80 in Kansas City and 100 in Dallas 
B)  125 in Kansas City and 150 in Dallas 
C)  100 in Kansas City and 124.5 in Dallas 
D)  100 in Kansas City and 140 in Dallas 
A)  80 in Kansas City and 100 in Dallas 
B)  125 in Kansas City and 150 in Dallas 
C)  100 in Kansas City and 124.5 in Dallas 
D)  100 in Kansas City and 140 in Dallas

Question 13

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

Accepted Answer

A)  increased from 2004 to 2005 and increased from 2005 to 2006. 
B)  increased from 2004 to 2005 and decreased from 2005 to 2006. 
C)  decreased from 2004 to 2005 and increased from 2005 to 2006. 
D)  decreased from 2004 to 2005 and decreased from 2005 to 2006. 
A)  increased from 2004 to 2005 and increased from 2005 to 2006. 
B)  increased from 2004 to 2005 and decreased from 2005 to 2006. 
C)  decreased from 2004 to 2005 and increased from 2005 to 2006. 
D)  decreased from 2004 to 2005 and decreased from 2005 to 2006.

Question 14

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

Accepted Answer

A)  the number of apples bought by the typical consumer is equal to the number of pears bought by the typical consumer in each year. 
B)  neither the number of apples nor the number of pears bought by the typical consumer changes from year to year. 
C)  the percentage change in the price of apples is equal to the percentage change in the price of pears from year to year. 
D)  neither the price of apples nor the price of pears changes from year to year. 
A)  the number of apples bought by the typical consumer is equal to the number of pears bought by the typical consumer in each year. 
B)  neither the number of apples nor the number of pears bought by the typical consumer changes from year to year. 
C)  the percentage change in the price of apples is equal to the percentage change in the price of pears from year to year. 
D)  neither the price of apples nor the price of pears changes from year to year.

Question 15

Scenario 24-4
Quinn has job offers in Wrexington and across the country in Charlieville. The Wrexington job would pay a salary of $50,000 per year, and the Charlieville job would pay a salary of $40,000 per year. The CPI in Wrexington is 150, and the CPI in Charlieville is 90.
-Refer to Scenario 24-4. The Wrexington salary in Charlieville dollars is

Accepted Answer

A)  $30,000.00. 
B)  $33,333.33. 
C)  $45,000.00 
D)  $83,333.33. 
A)  $30,000.00. 
B)  $33,333.33. 
C)  $45,000.00 
D)  $83,333.33.

Question 16

Consternation Corporation has an agreement with its workers to index completely the wage of its employees using the CPI. Consternation Corporation currently pays its production line workers $7.50 an hour and is scheduled to index their wages today. If the CPI is currently 130 and was 125 a year ago, the firm should increase the hourly wages of its workers by

Accepted Answer

A)  $0.04. 
B)  $0.29. 
C)  $0.30. 
D)  $0.50. 
A)  $0.04. 
B)  $0.29. 
C)  $0.30. 
D)  $0.50.

Question 17

In a simple economy, people consume only 2 goods, food and clothing. The market basket of goods used to compute the CPI consists of 50 units of food and 10 units of clothing.
   
a. What are the percentage increases in the price of food and in the price of clothing?
b. What is the percentage increase in the CPI?
c. Do these price changes affect all consumers to the same extent? Explain.

Accepted Answer

a. The price of food increased by 50 per

Question 18

Rosa deposits $100 in a bank account that pays an annual interest rate of 20 percent. A year later, after Rosa has accumulated $20 in interest, she withdraws her $120. Rosa's purchasing power

Accepted Answer

A)  did not change if the inflation rate was 20 percent. 
B)  decreased if the inflation rate was -5 percent. 
C)  increased if the inflation rate was 22 percent. 
D)  More than one of the above is correct. 
A)  did not change if the inflation rate was 20 percent. 
B)  decreased if the inflation rate was -5 percent. 
C)  increased if the inflation rate was 22 percent. 
D)  More than one of the above is correct.

Question 19

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 2008 is the base year, then the consumer price index was

Accepted Answer

A)  100.00 in 2008, 110.03 in 2009, and 117.43 in 2010. 
B)  100.00 in 2008, 110.03 in 2009, and 129.20 in 2010. 
C)  100.00 in 2008, 117.00 in 2009, and 132.50 in 2010. 
D)  169.50 in 2008, 186.50 in 2009, and 219.00 in 2010. 
A)  100.00 in 2008, 110.03 in 2009, and 117.43 in 2010. 
B)  100.00 in 2008, 110.03 in 2009, and 129.20 in 2010. 
C)  100.00 in 2008, 117.00 in 2009, and 132.50 in 2010. 
D)  169.50 in 2008, 186.50 in 2009, and 219.00 in 2010.

Question 20

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

The purpose of measuring the overall level of prices in the economy is to permit comparison between dollar figures from different times.

Why does the GDP deflator give a different rate of inflation than the CPI?

If the CPI was 108.00 in 1942 and is 336.96 today, then $10 in 1942 purchased the same amount of goods and services as

In the CPI, goods and services are weighted according to

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 2009 spending in 2014 dollars is about

The Bureau of Labor Statistics is part of the U.S. Department of Labor.

Marion collected Social Security payments of $250 a month in 1985. If the price index rose from 90 to 108 between 1985 and 1986, then her Social Security payments for 1986 should have been

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 cost of the basket

Suppose a basket of goods and services has been selected to calculate the CPI and 2012 has been chosen as the base year. In 2012, the basket's cost was $80.00; in 2013, the basket's cost was $84; and in 2014, the basket's cost was $87.60. The value of the CPI was

If the cost of apparel increases by 50 percent, then, other things the same, the CPI is likely to increase by about

The inflation rate is defined as the

Wilson is offered a job in Kansas City that pays $50,000 and a job in Dallas that pays $60,000. Which pair of CPIs would ensure that the two salaries have the same purchasing power?

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

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

Rosa deposits $100 in a bank account that pays an annual interest rate of 20 percent. A year later, after Rosa has accumulated $20 in interest, she withdraws her $120. Rosa's purchasing power

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 2008 is the base year, then the consumer price index was

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?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: the Costs of Taxation

Application: International Trade

Measuring a Nations Income

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

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 Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

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Exam 11: Measuring the Cost of Living

The purpose of measuring the overall level of prices in the economy is to permit comparison between dollar figures from different times.

Why does the GDP deflator give a different rate of inflation than the CPI?

If the CPI was 108.00 in 1942 and is 336.96 today, then $10 in 1942 purchased the same amount of goods and services as

In the CPI, goods and services are weighted according to

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 2009 spending in 2014 dollars is about

The Bureau of Labor Statistics is part of the U.S. Department of Labor.

Marion collected Social Security payments of $250 a month in 1985. If the price index rose from 90 to 108 between 1985 and 1986, then her Social Security payments for 1986 should have been

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 cost of the basket

Suppose a basket of goods and services has been selected to calculate the CPI and 2012 has been chosen as the base year. In 2012, the basket's cost was $80.00; in 2013, the basket's cost was $84; and in 2014, the basket's cost was $87.60. The value of the CPI was

If the cost of apparel increases by 50 percent, then, other things the same, the CPI is likely to increase by about

The inflation rate is defined as the

Wilson is offered a job in Kansas City that pays $50,000 and a job in Dallas that pays $60,000. Which pair of CPIs would ensure that the two salaries have the same purchasing power?

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

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

Rosa deposits $100 in a bank account that pays an annual interest rate of 20 percent. A year later, after Rosa has accumulated $20 in interest, she withdraws her $120. Rosa's purchasing power

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 2008 is the base year, then the consumer price index was

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?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand, and Government Policies

Consumers, Producers, and the Efficiency of Markets

Application: the Costs of Taxation

Application: International Trade

Measuring a Nations Income

Production and Growth

Saving, Investment, and the Financial System

The Basic Tools of Finance

Unemployment

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 Trade-Off Between Inflation and Unemployment

Six Debates Over Macroeconomic Policy

Filters