Question 1

Your wage this year is $15 per hour and the CPI is 178.Next year you get a raise to $17 and the CPI rises to 185.What has happened?

Accepted Answer

A) Your real wage has increased but by a smaller percentage than your nominal wage. 
B) Your nominal wage has increased but your real wage has declined. 
C) Your real wage rate has increased by a larger percentage than your nominal wage. 
D) Your real and nominal wages have each increased by the same percentage. 
E) Your nominal wage has increased but your real wage has not changed. 
A) Your real wage has increased but by a smaller percentage than your nominal wage. 
B) Your nominal wage has increased but your real wage has declined. 
C) Your real wage rate has increased by a larger percentage than your nominal wage. 
D) Your real and nominal wages have each increased by the same percentage. 
E) Your nominal wage has increased but your real wage has not changed.

Question 2

In 1979,the price of gasoline was $1.389 per gallon and the CPI was 72.6.In 2003,the price of gasoline was $1.589 per gallon and the CPI was 182.9.Find the real price of gasoline in 1979 and 2003 in terms of base period dollars.

Accepted Answer

To adjust the price in 1979,the ratio of

Question 3

Because the CPI overstates inflation,

Accepted Answer

A) when wages are linked to the CPI,workers' wages become too low as time passes. 
B) as time passes,government payments are increasingly lower than intended. 
C) as time passes,government outlays are increased by more than necessary to compensate for inflation. 
D) workers do not receive adequate compensation for price changes. 
E) most contracts use the GDP deflator to measure inflation. 
A) when wages are linked to the CPI,workers' wages become too low as time passes. 
B) as time passes,government payments are increasingly lower than intended. 
C) as time passes,government outlays are increased by more than necessary to compensate for inflation. 
D) workers do not receive adequate compensation for price changes. 
E) most contracts use the GDP deflator to measure inflation.

Question 4

Suppose that in 2012,real GDP is larger than nominal GDP.The GDP price index in 2012 is definitely

Accepted Answer

A) negative. 
B) larger than the GDP price index in 2012. 
C) less than the GDP price index in 2012. 
D) greater than 100. 
E) less than 100. 
A) negative. 
B) larger than the GDP price index in 2012. 
C) less than the GDP price index in 2012. 
D) greater than 100. 
E) less than 100.

Question 5

According to the historical record of inflation since the 1300s,the inflation rate

Accepted Answer

A) became highest in the twentieth century. 
B) was at its lowest after Columbus arrived to America. 
C) was at its highest during the Industrial Revolution. 
D) has always been consistently high. 
E) was higher in the 1300s than in the 1900s. 
A) became highest in the twentieth century. 
B) was at its lowest after Columbus arrived to America. 
C) was at its highest during the Industrial Revolution. 
D) has always been consistently high. 
E) was higher in the 1300s than in the 1900s.

Question 6

When the CPI rises ________,the inflation rate is ________.

Accepted Answer

A) steadily;zero 
B) rapidly;high 
C) slowly;high 
D) rapidly;low 
E) rapidly;either high,low,or zero depending on whether production of output is increasing,decreasing,or not changing. 
A) steadily;zero 
B) rapidly;high 
C) slowly;high 
D) rapidly;low 
E) rapidly;either high,low,or zero depending on whether production of output is increasing,decreasing,or not changing.

Question 7

-The table above gives the purchases of a typical consumer in a country comprised of one large city.These consumers purchase only restaurant meals and parking.The year 2010 is the reference base period.
a.Find the total cost of the CPI market basket for 2010 and 2011.
b.What is the CPI in 2010 and in 2011?
c.What is the inflation rate between 2010 and 2011?

Accepted Answer

a.The total cost of the CPI market baske

Question 8

The real interest rate equals the

Accepted Answer

A) nominal interest rate multiplied by 100. 
B) nominal interest rate divided by 100. 
C) nominal interest rate minus the inflation rate. 
D) inflation rate minus the nominal interest rate. 
E) nominal interest rate divided by the inflation rate and then multiplied by 100. 
A) nominal interest rate multiplied by 100. 
B) nominal interest rate divided by 100. 
C) nominal interest rate minus the inflation rate. 
D) inflation rate minus the nominal interest rate. 
E) nominal interest rate divided by the inflation rate and then multiplied by 100.

Question 9

Real GDP is $1,400 billion and nominal GDP is $1,800.The GDP price index equals

Accepted Answer

A) 100.0. 
B) 77.0. 
C) 128.6. 
D) 2.86. 
E) 222.2. 
A) 100.0. 
B) 77.0. 
C) 128.6. 
D) 2.86. 
E) 222.2.

Question 10

If the price of a soda was 15 cents in 1970,when the CPI was 50,and 50 cents in 2007,when the CPI was 172,then

Accepted Answer

A) prices on average have increased 567 percent. 
B) prices on average have increased 244 percent. 
C) the price of the soda was greater in real value in 1970 than in 2007. 
D) the price of a soda has increased a greater percentage than the CPI. 
E) the real price of a soda is the same in 1970 and 2007. 
A) prices on average have increased 567 percent. 
B) prices on average have increased 244 percent. 
C) the price of the soda was greater in real value in 1970 than in 2007. 
D) the price of a soda has increased a greater percentage than the CPI. 
E) the real price of a soda is the same in 1970 and 2007.

Question 11

Suppose that the CPI basket contains only 40 heads of cauliflower and 60 bunches of broccoli.If the price of cauliflower goes down by $1 per head and the price of broccoli goes up by $1 per bunch,then

Accepted Answer

A) the CPI does not change. 
B) the CPI increases. 
C) the CPI decreases. 
D) the CPI might increase or decrease depending how the quantities are affected by the price changes. 
E) There is not enough information to answer this question. 
A) the CPI does not change. 
B) the CPI increases. 
C) the CPI decreases. 
D) the CPI might increase or decrease depending how the quantities are affected by the price changes. 
E) There is not enough information to answer this question.

Question 12

The CPI market basket

Accepted Answer

A) weights the goods and services according to the budget of an average urban household. 
B) determines the best possible way of taxing the average urban household. 
C) determines how the spending patterns of the average urban household change from month to month. 
D) determines how spending patterns change from urban household to urban household. 
E) changes from one month to the next in order to calculate the CPI. 
A) weights the goods and services according to the budget of an average urban household. 
B) determines the best possible way of taxing the average urban household. 
C) determines how the spending patterns of the average urban household change from month to month. 
D) determines how spending patterns change from urban household to urban household. 
E) changes from one month to the next in order to calculate the CPI.

Question 13

Constructing the CPI involves which of the following stages?
I.conducting the monthly price survey
Ii.converting the CPI to an international index
Iii.selecting CPI market basket

Accepted Answer

A) i only 
B) ii only 
C) iii only 
D) i and iii 
E) i,ii,and iii 
A) i only 
B) ii only 
C) iii only 
D) i and iii 
E) i,ii,and iii

Question 14

If the current period has a CPI of 143,then the amount of inflation since the base period is

Accepted Answer

A) 143 percent. 
B) 43 percent. 
C) 57 percent. 
D) 157 percent. 
E) unknown without knowing the base period's CPI. 
A) 143 percent. 
B) 43 percent. 
C) 57 percent. 
D) 157 percent. 
E) unknown without knowing the base period's CPI.

Question 15

If your real income in base year prices is $50,000,then if the CPI is 170,what is your nominal income?

Accepted Answer

A) $29,411.76 
B) $50,000.00 
C) $85,000.00 
D) $71,428.57 
E) $70,000.00 
A) $29,411.76 
B) $50,000.00 
C) $85,000.00 
D) $71,428.57 
E) $70,000.00

Question 16

Since 1300,the inflation rate has been greater than 2 percent per year and reaching its highest peaks

Accepted Answer

A) primarily before 1400. 
B) primarily between 1400 and 1500. 
C) primarily between 1500 and 1700. 
D) primarily between 1700 and 1900. 
E) primarily after 1900. 
A) primarily before 1400. 
B) primarily between 1400 and 1500. 
C) primarily between 1500 and 1700. 
D) primarily between 1700 and 1900. 
E) primarily after 1900.

Question 17

To convert the nominal interest rate to the real interest rate,we

Accepted Answer

A) divide the nominal interest rate by the inflation rate. 
B) multiply the nominal interest rate by the inflation rate. 
C) subtract the inflation rate from the nominal interest rate. 
D) add the inflation rate to the nominal interest rate. 
E) subtract the nominal interest rate from the inflation rate and then multiply by 100. 
A) divide the nominal interest rate by the inflation rate. 
B) multiply the nominal interest rate by the inflation rate. 
C) subtract the inflation rate from the nominal interest rate. 
D) add the inflation rate to the nominal interest rate. 
E) subtract the nominal interest rate from the inflation rate and then multiply by 100.

Question 18

A country reports the total expenditures on the fixed CPI basket for the past three years.The cost of the CPI basket in 2010 was $23,000,the cost of the CPI basket for the reference base period,2011,was $23,805,and the cost of the CPI basket in 2012 was $24,500.The CPI for 2012 is

Accepted Answer

A) 93.9. 
B) 97.2. 
C) 102.9. 
D) 106.5. 
E) 245.0. 
A) 93.9. 
B) 97.2. 
C) 102.9. 
D) 106.5. 
E) 245.0.

Question 19

Define the nominal wage rate and the real wage rate.Can the nominal wage rate increase faster than the real wage rate?

Accepted Answer

The nominal wage rate is the wage rate m

Question 20

-The information in the above table gives the 2000 base period market basket and prices used to construct the CPI for a small nation.The table also has 2010 prices.What is the value of the CPI for 2010?

Accepted Answer

A) 140 
B) 133 
C) 100 
D) 71.4 
E) 142 
A) 140 
B) 133 
C) 100 
D) 71.4 
E) 142

Your wage this year is $15 per hour and the CPI is 178.Next year you get a raise to $17 and the CPI rises to 185.What has happened?

In 1979,the price of gasoline was $1.389 per gallon and the CPI was 72.6.In 2003,the price of gasoline was $1.589 per gallon and the CPI was 182.9.Find the real price of gasoline in 1979 and 2003 in terms of base period dollars.

Because the CPI overstates inflation,

Suppose that in 2012,real GDP is larger than nominal GDP.The GDP price index in 2012 is definitely

According to the historical record of inflation since the 1300s,the inflation rate

When the CPI rises ,the inflation rate is .

The real interest rate equals the

Real GDP is $1,400 billion and nominal GDP is $1,800.The GDP price index equals

If the price of a soda was 15 cents in 1970,when the CPI was 50,and 50 cents in 2007,when the CPI was 172,then

Suppose that the CPI basket contains only 40 heads of cauliflower and 60 bunches of broccoli.If the price of cauliflower goes down by $1 per head and the price of broccoli goes up by $1 per bunch,then

The CPI market basket

Constructing the CPI involves which of the following stages? I.conducting the monthly price survey Ii.converting the CPI to an international index Iii.selecting CPI market basket

If the current period has a CPI of 143,then the amount of inflation since the base period is

If your real income in base year prices is $50,000,then if the CPI is 170,what is your nominal income?

Since 1300,the inflation rate has been greater than 2 percent per year and reaching its highest peaks

To convert the nominal interest rate to the real interest rate,we

A country reports the total expenditures on the fixed CPI basket for the past three years.The cost of the CPI basket in 2010 was $23,000,the cost of the CPI basket for the reference base period,2011,was $23,805,and the cost of the CPI basket in 2012 was $24,500.The CPI for 2012 is

Define the nominal wage rate and the real wage rate.Can the nominal wage rate increase faster than the real wage rate?

-The information in the above table gives the 2000 base period market basket and prices used to construct the CPI for a small nation.The table also has 2010 prices.What is the value of the CPI for 2010?

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

Exam 16: The Cpi and the Cost of Living

Your wage this year is $15 per hour and the CPI is 178.Next year you get a raise to $17 and the CPI rises to 185.What has happened?

In 1979,the price of gasoline was $1.389 per gallon and the CPI was 72.6.In 2003,the price of gasoline was $1.589 per gallon and the CPI was 182.9.Find the real price of gasoline in 1979 and 2003 in terms of base period dollars.

Because the CPI overstates inflation,

Suppose that in 2012,real GDP is larger than nominal GDP.The GDP price index in 2012 is definitely

According to the historical record of inflation since the 1300s,the inflation rate

When the CPI rises ________,the inflation rate is ________.

The real interest rate equals the

Real GDP is $1,400 billion and nominal GDP is $1,800.The GDP price index equals

If the price of a soda was 15 cents in 1970,when the CPI was 50,and 50 cents in 2007,when the CPI was 172,then

Suppose that the CPI basket contains only 40 heads of cauliflower and 60 bunches of broccoli.If the price of cauliflower goes down by $1 per head and the price of broccoli goes up by $1 per bunch,then

The CPI market basket

Constructing the CPI involves which of the following stages? I.conducting the monthly price survey Ii.converting the CPI to an international index Iii.selecting CPI market basket

If the current period has a CPI of 143,then the amount of inflation since the base period is

If your real income in base year prices is $50,000,then if the CPI is 170,what is your nominal income?

Since 1300,the inflation rate has been greater than 2 percent per year and reaching its highest peaks

To convert the nominal interest rate to the real interest rate,we

A country reports the total expenditures on the fixed CPI basket for the past three years.The cost of the CPI basket in 2010 was $23,000,the cost of the CPI basket for the reference base period,2011,was $23,805,and the cost of the CPI basket in 2012 was $24,500.The CPI for 2012 is

Define the nominal wage rate and the real wage rate.Can the nominal wage rate increase faster than the real wage rate?

-The information in the above table gives the 2000 base period market basket and prices used to construct the CPI for a small nation.The table also has 2010 prices.What is the value of the CPI for 2010?

Getting Started

The Usand Global Economies

The Economic Problem

Demand and Supply

Elasticities of Demand and Supply

Efficiency and Fairness of Markets

Government Actions in Markets

Global Markets in Action

Externalities: Pollution, education, and Health Care

Production and Cost

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Gdp: a Measure of Total Production and Income

Jobs and Unemployment

Potential Gdp and Economic Growth

Money and the Monetary System

Aggregate Supply and Aggregate Demand

Fiscal Policy and Monetary Policy

Filters

When the CPI rises ,the inflation rate is .