Question 1

If the consumer price index was 96 in 2012, 100 in 2013, and 102 in 2014, then the base year must be

Accepted Answer

A)  2012. 
B)  2013. 
C)  2014. 
D)  The base year cannot be determined from the given information. 
A)  2012. 
B)  2013. 
C)  2014. 
D)  The base year cannot be determined from the given information.

Question 2

To which of the problems in the construction of the CPI is the invention of pocket-sized computers most relevant?

Accepted Answer

A)  substitution bias 
B)  introduction of new goods 
C)  unmeasured quality change 
D)  income bias 
A)  substitution bias 
B)  introduction of new goods 
C)  unmeasured quality change 
D)  income bias

Question 3

The CPI is calculated

Accepted Answer

A)  weekly. 
B)  monthly. 
C)  quarterly. 
D)  yearly. 
A)  weekly. 
B)  monthly. 
C)  quarterly. 
D)  yearly.

Question 4

Nate collected Social Security payments of $220 a month in 1985. If the price index rose from 90 to 108 between 1985 and 1986, then his Social Security payments for 1986 should have been

Accepted Answer

A)  $228. 
B)  $238. 
C)  $257. 
D)  $264. 
A)  $228. 
B)  $238. 
C)  $257. 
D)  $264.

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

Table 24-6
The table below pertains to Napandsnack, an economy in which the typical consumer's basket consists of 2 pillows and 15 hotdogs.  
-Refer to Table 24-6. If the base year is 2011, then the economy's inflation rate in 2011 was

Accepted Answer

A)  -5.0 percent. 
B)  -3.3 percent. 
C)  3.3 percent. 
D)  16.0 percent. 
A)  -5.0 percent. 
B)  -3.3 percent. 
C)  3.3 percent. 
D)  16.0 percent.

Question 7

The price index was 128 in 2013, and the inflation rate was 24 percent between 2012 and 2013. The price index in 2012 was

Accepted Answer

A)  104.0. 
B)  103.2. 
C)  158.7. 
D)  152.0. 
A)  104.0. 
B)  103.2. 
C)  158.7. 
D)  152.0.

Question 8

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. Will's 2009 food expenditures in 2010 dollars amount to

Accepted Answer

A)  $5,500. 
B)  $5,250. 
C)  $4,975. 
D)  $3,625. 
A)  $5,500. 
B)  $5,250. 
C)  $4,975. 
D)  $3,625.

Question 9

If the consumer price index is 120 in 2009 and 139.2 in 2010, then the rate of inflation for 2010 is 39.2 percent.

Accepted Answer

A) True 
 B)False

Question 10

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.

Accepted Answer

A) True 
 B)False

Question 11

The CPI is a measure of the overall cost of the goods and services bought by

Accepted Answer

A)  a typical firm. 
B)  the government. 
C)  a typical consumer. 
D)  All of the above are correct. 
A)  a typical firm. 
B)  the government. 
C)  a typical consumer. 
D)  All of the above are correct.

Question 12

Which of the following agencies calculates the CPI?

Accepted Answer

A)  the National Price Board 
B)  the Department Of Weight and Measurements 
C)  the Bureau of Labor Statistics 
D)  the Congressional Budget Office 
A)  the National Price Board 
B)  the Department Of Weight and Measurements 
C)  the Bureau of Labor Statistics 
D)  the Congressional Budget Office

Question 13

Assume most athletic apparel bought by U.S. consumers is imported from other nations. If all else is constant, an increase in the price of foreign-made athletic apparel will cause the U.S.

Accepted Answer

A)  consumer price index and GDP deflator to increase by exactly the same amount. 
B)  GDP deflator to increase more than the consumer price index. 
C)  consumer price index to increase more than the GDP deflator. 
D)  GDP deflator to decrease less than the consumer price index. 
A)  consumer price index and GDP deflator to increase by exactly the same amount. 
B)  GDP deflator to increase more than the consumer price index. 
C)  consumer price index to increase more than the GDP deflator. 
D)  GDP deflator to decrease less than the consumer price index.

Question 14

The CPI differs from the GDP deflator in that

Accepted Answer

A)  the CPI is an inflation index, while the GDP deflator is a price index. 
B)  substitution bias is not a problem with the CPI, but it is a problem with the GDP deflator. 
C)  increases in the prices of foreign produced goods that are sold to U.S. consumers show up in the GDP deflator but not in the CPI. 
D)  increases in the prices of domestically produced goods that are sold to the U.S. government show up in the GDP deflator but not in the CPI. 
A)  the CPI is an inflation index, while the GDP deflator is a price index. 
B)  substitution bias is not a problem with the CPI, but it is a problem with the GDP deflator. 
C)  increases in the prices of foreign produced goods that are sold to U.S. consumers show up in the GDP deflator but not in the CPI. 
D)  increases in the prices of domestically produced goods that are sold to the U.S. government show up in the GDP deflator but not in the CPI.

Question 15

Table 24-16
The table below lists annual consumer price index and inflation rates for a country over the period 2010-2013. Assume the year 2010 is used as the base year.  
-Refer to Table 24-16. Calculate the missing value that belongs in space A.

Accepted Answer

The answer of Table 24-16
The table below lists annual consumer...

Question 16

Suppose the price of a quart of milk rises from $1.00 to $1.20 and the price of a T-shirt rises from $8.00 to $9.60. If the CPI rises from 150 to 195, then people likely will buy

Accepted Answer

A)  more milk and more T-shirts. 
B)  more milk and fewer T-shirts. 
C)  less milk and more T-shirts. 
D)  less milk and fewer T-shirts. 
A)  more milk and more T-shirts. 
B)  more milk and fewer T-shirts. 
C)  less milk and more T-shirts. 
D)  less milk and fewer T-shirts.

Question 17

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

Question 18

The real interest rate is the interest rate corrected for inflation.

Accepted Answer

A) True 
 B)False

Question 19

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. To the nearest dollar, Will's 2010 food expenditures in 2009 dollars amount to

Accepted Answer

A)  $5,236. 
B)  $5,431. 
C)  $5,524. 
D)  $5,608. 
A)  $5,236. 
B)  $5,431. 
C)  $5,524. 
D)  $5,608.

Question 20

The GDP deflator reflects the

Accepted Answer

A)  level of prices in the base year relative to the current level of prices. 
B)  current level of prices relative to the level of prices in the base year. 
C)  level of real output in the base year relative to the current level of real output. 
D)  current level of real output relative to the level of real output in the base year. 
A)  level of prices in the base year relative to the current level of prices. 
B)  current level of prices relative to the level of prices in the base year. 
C)  level of real output in the base year relative to the current level of real output. 
D)  current level of real output relative to the level of real output in the base year.

Exam 24: Measuring the Cost of Living

If the consumer price index was 96 in 2012, 100 in 2013, and 102 in 2014, then the base year must be

To which of the problems in the construction of the CPI is the invention of pocket-sized computers most relevant?

The CPI is calculated

Nate collected Social Security payments of $220 a month in 1985. If the price index rose from 90 to 108 between 1985 and 1986, then his Social Security payments for 1986 should have been

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

Table 24-6 The table below pertains to Napandsnack, an economy in which the typical consumer's basket consists of 2 pillows and 15 hotdogs. -Refer to Table 24-6. If the base year is 2011, then the economy's inflation rate in 2011 was

The price index was 128 in 2013, and the inflation rate was 24 percent between 2012 and 2013. The price index in 2012 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. Will's 2009 food expenditures in 2010 dollars amount to

If the consumer price index is 120 in 2009 and 139.2 in 2010, then the rate of inflation for 2010 is 39.2 percent.

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.

The CPI is a measure of the overall cost of the goods and services bought by

Which of the following agencies calculates the CPI?

Assume most athletic apparel bought by U.S. consumers is imported from other nations. If all else is constant, an increase in the price of foreign-made athletic apparel will cause the U.S.

The CPI differs from the GDP deflator in that

Table 24-16 The table below lists annual consumer price index and inflation rates for a country over the period 2010-2013. Assume the year 2010 is used as the base year. -Refer to Table 24-16. Calculate the missing value that belongs in space A.

Suppose the price of a quart of milk rises from $1.00 to $1.20 and the price of a T-shirt rises from $8.00 to $9.60. If the CPI rises from 150 to 195, then people likely will buy

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

The real interest rate is the interest rate corrected for inflation.

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. To the nearest dollar, Will's 2010 food expenditures in 2009 dollars amount to

The GDP deflator reflects the

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

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Oligopoly

The Markets for the Factors of Production

Earnings and Discrimination

Income Inequality and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

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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