Question 1

If higher prices cause buyers to shop at discount stores,the CPI has

Accepted Answer

A) a new goods bias. 
B) a quality change bias. 
C) a commodity substitution bias. 
D) an outlet substitution bias. 
E) a discounted bias. 
A) a new goods bias. 
B) a quality change bias. 
C) a commodity substitution bias. 
D) an outlet substitution bias. 
E) a discounted bias.

Question 2

The real interest rate is equal to the

Accepted Answer

A) nominal interest rate plus the inflation rate. 
B) nominal interest rate minus the inflation rate. 
C) nominal interest rate times the inflation rate. 
D) nominal interest rate divided by the inflation rate. 
E) inflation rate minus the nominal interest rate. 
A) nominal interest rate plus the inflation rate. 
B) nominal interest rate minus the inflation rate. 
C) nominal interest rate times the inflation rate. 
D) nominal interest rate divided by the inflation rate. 
E) inflation rate minus the nominal interest rate.

Question 3

Define the nominal interest rate and the real interest rate.Discuss the relationship between the nominal interest rate and the real interest rate.

Accepted Answer

The nominal interest rate is the percent

Question 4

The reference base period for the CPI has an index number of

Accepted Answer

A) 100. 
B) 1. 
C) 0. 
D) 10. 
E) 1,000. 
A) 100. 
B) 1. 
C) 0. 
D) 10. 
E) 1,000.

Question 5

The GDP deflator is a measure of

Accepted Answer

A) taxes and subsidies. 
B) changes in quantities. 
C) prices. 
D) depreciation. 
E) changes in nominal GDP. 
A) taxes and subsidies. 
B) changes in quantities. 
C) prices. 
D) depreciation. 
E) changes in nominal GDP.

Question 6

The Consumer Price Index is calculated by the

Accepted Answer

A) Bureau of Labor Statistics. 
B) Department of Labor. 
C) Department of Commerce. 
D) Federal Reserve Bank of New York. 
E) Society for Consumer Protection. 
A) Bureau of Labor Statistics. 
B) Department of Labor. 
C) Department of Commerce. 
D) Federal Reserve Bank of New York. 
E) Society for Consumer Protection.

Question 7

What is inflation and how is it measured using the Consumer Price Index?

Accepted Answer

The inflation rate is the percentage cha

Question 8

The Consumer Price Index measures the average prices paid by

Accepted Answer

A) businesses for a fixed market basket of resources. 
B) businesses for the most frequently used basket of resources. 
C) urban consumers for a fixed market basket of goods and services. 
D) urban consumers for the goods and services that most frequently change in price. 
E) businesses and consumers for a market basket of goods and services. 
A) businesses for a fixed market basket of resources. 
B) businesses for the most frequently used basket of resources. 
C) urban consumers for a fixed market basket of goods and services. 
D) urban consumers for the goods and services that most frequently change in price. 
E) businesses and consumers for a market basket of goods and services.

Question 9

An example of the commodity substitution bias in the calculation of the CPI is a price increase in

Accepted Answer

A) turkey when the price of chicken doesn't rise. 
B) a GPS unit versus a AAA map book. 
C) a 2014 Toyota Camry versus a 2005 Honda Civic. 
D) etexts versus used books bought through Craigslist. 
E) new homes because people's incomes have increased. 
A) turkey when the price of chicken doesn't rise. 
B) a GPS unit versus a AAA map book. 
C) a 2014 Toyota Camry versus a 2005 Honda Civic. 
D) etexts versus used books bought through Craigslist. 
E) new homes because people's incomes have increased.

Question 10

To find the cost of the CPI market basket in the current period we have to multiply the

Accepted Answer

A) quantities in the CPI market basket by the base period prices. 
B) quantities in the CPI market basket by the current period prices. 
C) current period quantities in the CPI market basket by the base period prices. 
D) current period quantities in the CPI market basket by the current period prices. 
E) quantities in the CPI market basket by the base period prices and then multiply by 100. 
A) quantities in the CPI market basket by the base period prices. 
B) quantities in the CPI market basket by the current period prices. 
C) current period quantities in the CPI market basket by the base period prices. 
D) current period quantities in the CPI market basket by the current period prices. 
E) quantities in the CPI market basket by the base period prices and then multiply by 100.

Question 11

Suppose that the cost of the CPI basket of goods and services rises from $137 in 2010,which is the base year,to $159 in 2011.The CPI in 2011 is ________ and the inflation rate from 2010 to 2011 is ________.

Accepted Answer

A) 86;14 percent 
B) 86;22 percent 
C) 116;22 percent 
D) 116;16 percent 
E) There is not enough information to answer this question. 
A) 86;14 percent 
B) 86;22 percent 
C) 116;22 percent 
D) 116;16 percent 
E) There is not enough information to answer this question.

Question 12

Since 1981,the

Accepted Answer

A) real wage rate increased steadily. 
B) nominal wage rate increased and the real wage rate did not change by very much. 
C) real wage rate increased more than the nominal wage rate. 
D) nominal wage rate increased at an uneven pace whereas the increase in the real wage rate was steady and constant. 
E) nominal wage rate and real wage rate both decreased. 
A) real wage rate increased steadily. 
B) nominal wage rate increased and the real wage rate did not change by very much. 
C) real wage rate increased more than the nominal wage rate. 
D) nominal wage rate increased at an uneven pace whereas the increase in the real wage rate was steady and constant. 
E) nominal wage rate and real wage rate both decreased.

Question 13

What,if any,is the impact of the CPI bias on government spending and taxes?

Accepted Answer

About one third of government outlays,su

Question 14

The inflation rate measures the

Accepted Answer

A) average price of the goods and services consumed by urban consumers. 
B) percentage change in the CPI from one year to the next year. 
C) cost of the CPI market basket at current period prices divided by the cost of the CPI market basket at base period prices. 
D) percentage change in the quantity of goods and services consumed by urban consumers. 
E) cost of the CPI market basket at base period prices divided by the cost of the CPI market basket at current period prices. 
A) average price of the goods and services consumed by urban consumers. 
B) percentage change in the CPI from one year to the next year. 
C) cost of the CPI market basket at current period prices divided by the cost of the CPI market basket at base period prices. 
D) percentage change in the quantity of goods and services consumed by urban consumers. 
E) cost of the CPI market basket at base period prices divided by the cost of the CPI market basket at current period prices.

Question 15

If we look at real and nominal interest rates in the United States since 1971,we see that

Accepted Answer

A) the nominal interest rate has always been less than the real interest rate because of inflation. 
B) the real interest rate has almost always been less than the nominal interest rate because of inflation. 
C) at times the nominal interest rate has been greater than the real interest rate and at times has been less than it. 
D) the difference between the nominal and real interest rates has widened during the 1990s because of inflation. 
E) both the nominal and real interest rates were negative in the highly inflationary 1970s. 
A) the nominal interest rate has always been less than the real interest rate because of inflation. 
B) the real interest rate has almost always been less than the nominal interest rate because of inflation. 
C) at times the nominal interest rate has been greater than the real interest rate and at times has been less than it. 
D) the difference between the nominal and real interest rates has widened during the 1990s because of inflation. 
E) both the nominal and real interest rates were negative in the highly inflationary 1970s.

Question 16

If for a given year nominal GDP is $2,000 billion and real GDP is $1,500 billion,then the GDP price index is

Accepted Answer

A) 133. 
B) 1.33. 
C) 100. 
D) 0.75. 
E) 750. 
A) 133. 
B) 1.33. 
C) 100. 
D) 0.75. 
E) 750.

Question 17

If you are earning $20,000 this year and the CPI is 165,your real income in base year prices is

Accepted Answer

A) $121.21. 
B) $12,121.21. 
C) $20,000. 
D) $16,500. 
E) $33,000. 
A) $121.21. 
B) $12,121.21. 
C) $20,000. 
D) $16,500. 
E) $33,000.

Question 18

Suppose the market basket of consumer goods and services costs $180 using the base period prices,and the same basket of goods and services costs $300 using the current period prices.The CPI for the current year period equals

Accepted Answer

A) 166.7. 
B) 66.7. 
C) 160.0. 
D) 60.0. 
E) 300.0. 
A) 166.7. 
B) 66.7. 
C) 160.0. 
D) 60.0. 
E) 300.0.

Question 19

The bias in the CPI affects government outlays because the overstatement of inflation

Accepted Answer

A) increases fiscal pressure. 
B) increases government outlays by more than what is justified. 
C) decreases social welfare benefits. 
D) decreases government outlays by more than what is justified. 
E) means that tax receipts are less than what is needed to cover government outlays. 
A) increases fiscal pressure. 
B) increases government outlays by more than what is justified. 
C) decreases social welfare benefits. 
D) decreases government outlays by more than what is justified. 
E) means that tax receipts are less than what is needed to cover government outlays.

Question 20

Since 1305,of the following centuries the inflation rate has been the highest during the

Accepted Answer

A) 17th century. 
B) 16th century. 
C) 20th century. 
D) 14th century. 
E) 15th century. 
A) 17th century. 
B) 16th century. 
C) 20th century. 
D) 14th century. 
E) 15th century.

If higher prices cause buyers to shop at discount stores,the CPI has

The real interest rate is equal to the

Define the nominal interest rate and the real interest rate.Discuss the relationship between the nominal interest rate and the real interest rate.

The reference base period for the CPI has an index number of

The GDP deflator is a measure of

The Consumer Price Index is calculated by the

What is inflation and how is it measured using the Consumer Price Index?

The Consumer Price Index measures the average prices paid by

An example of the commodity substitution bias in the calculation of the CPI is a price increase in

To find the cost of the CPI market basket in the current period we have to multiply the

Suppose that the cost of the CPI basket of goods and services rises from $137 in 2010,which is the base year,to $159 in 2011.The CPI in 2011 is and the inflation rate from 2010 to 2011 is .

Since 1981,the

What,if any,is the impact of the CPI bias on government spending and taxes?

The inflation rate measures the

If we look at real and nominal interest rates in the United States since 1971,we see that

If for a given year nominal GDP is $2,000 billion and real GDP is $1,500 billion,then the GDP price index is

If you are earning $20,000 this year and the CPI is 165,your real income in base year prices is

Suppose the market basket of consumer goods and services costs $180 using the base period prices,and the same basket of goods and services costs $300 using the current period prices.The CPI for the current year period equals

The bias in the CPI affects government outlays because the overstatement of inflation

Since 1305,of the following centuries the inflation rate has been the highest during the

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

If higher prices cause buyers to shop at discount stores,the CPI has

The real interest rate is equal to the

Define the nominal interest rate and the real interest rate.Discuss the relationship between the nominal interest rate and the real interest rate.

The reference base period for the CPI has an index number of

The GDP deflator is a measure of

The Consumer Price Index is calculated by the

What is inflation and how is it measured using the Consumer Price Index?

The Consumer Price Index measures the average prices paid by

An example of the commodity substitution bias in the calculation of the CPI is a price increase in

To find the cost of the CPI market basket in the current period we have to multiply the

Suppose that the cost of the CPI basket of goods and services rises from $137 in 2010,which is the base year,to $159 in 2011.The CPI in 2011 is ________ and the inflation rate from 2010 to 2011 is ________.

Since 1981,the

What,if any,is the impact of the CPI bias on government spending and taxes?

The inflation rate measures the

If we look at real and nominal interest rates in the United States since 1971,we see that

If for a given year nominal GDP is $2,000 billion and real GDP is $1,500 billion,then the GDP price index is

If you are earning $20,000 this year and the CPI is 165,your real income in base year prices is

Suppose the market basket of consumer goods and services costs $180 using the base period prices,and the same basket of goods and services costs $300 using the current period prices.The CPI for the current year period equals

The bias in the CPI affects government outlays because the overstatement of inflation

Since 1305,of the following centuries the inflation rate has been the highest during the

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

Suppose that the cost of the CPI basket of goods and services rises from $137 in 2010,which is the base year,to $159 in 2011.The CPI in 2011 is and the inflation rate from 2010 to 2011 is .