Question 1

During this year,nominal GDP in Syldavia was $720 billion and real GDP was $720 billion.The GDP price index in Syldavia in this year was

Accepted Answer

A) 0,because nominal GDP equaled real GDP. 
B) 100. 
C) 720. 
D) -1. 
E) 720 billion. 
A) 0,because nominal GDP equaled real GDP. 
B) 100. 
C) 720. 
D) -1. 
E) 720 billion.

Question 2

The CPI was 225 in 2008 and 232.2 in 2009.The nominal interest rate during this period was 1.4 percent.What was the real interest rate during this period?

Accepted Answer

A) 3.2 percent 
B) 1.8 percent 
C) 4.6 percent 
D) -3.2 percent 
E) -1.8 percent 
A) 3.2 percent 
B) 1.8 percent 
C) 4.6 percent 
D) -3.2 percent 
E) -1.8 percent

Question 3

The CPI is reported once every

Accepted Answer

A) year. 
B) quarter. 
C) month. 
D) week. 
E) other year. 
A) year. 
B) quarter. 
C) month. 
D) week. 
E) other year.

Question 4

-The data in the table above shows the consumption by families in a small (poor)economy.The families consume only salt and bread.The reference base period is 2011.The inflation rate between 2011 and 2012 is

Accepted Answer

A) 52.5 percent. 
B) 123.1 percent. 
C) 23.1 percent. 
D) 18.8 percent. 
E) 118.8 percent. 
A) 52.5 percent. 
B) 123.1 percent. 
C) 23.1 percent. 
D) 18.8 percent. 
E) 118.8 percent.

Question 5

If you have the cost of the CPI market basket at current prices and the cost of the CPI market basket at base period prices,how do you calculate the CPI?

Accepted Answer

The answer of If you have the cost of the...

Question 6

In the late 1970s,the inflation rate was over 10 percent per year.Many home mortgage lending institutions had mortgages outstanding that had been made in the 1960s at nominal interest rates of around 5 percent per year.Many of these lending institutions failed.What can explain the high failure rate of lenders in the late 1970s?

Accepted Answer

The real interest rate the lenders were

Question 7

The CPI is a measure of the

Accepted Answer

A) percentage change in the price level. 
B) average prices of all goods. 
C) average prices paid by consumers for a fixed basket of goods and services. 
D) average prices of all goods and services produced. 
E) average change in the output of the goods and services purchased by a typical urban consumer. 
A) percentage change in the price level. 
B) average prices of all goods. 
C) average prices paid by consumers for a fixed basket of goods and services. 
D) average prices of all goods and services produced. 
E) average change in the output of the goods and services purchased by a typical urban consumer.

Question 8

The period for which the Consumer Price Index is defined to equal 100 is called the

Accepted Answer

A) reference base period. 
B) base period. 
C) starting point. 
D) zero period. 
E) beginning period. 
A) reference base period. 
B) base period. 
C) starting point. 
D) zero period. 
E) beginning period.

Question 9

The quality change bias is most likely to put ________ into the CPI and so ________ the inflation rate.

Accepted Answer

A) a downward bias;understate 
B) an upward bias;understate 
C) an upward bias;overstate 
D) a downward bias;overstate 
E) a random bias;randomly overstate or understate 
A) a downward bias;understate 
B) an upward bias;understate 
C) an upward bias;overstate 
D) a downward bias;overstate 
E) a random bias;randomly overstate or understate

Question 10

The GDP price index equals
I.nominal GDP divided by real GDP multiplied by 100.
Ii.a measure of the price level.
Iii.an average of current prices expressed as a percentage of base-year prices.

Accepted Answer

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

Question 11

Explain the CPI bias and how it can distort private contracts and increase government outlays.

Accepted Answer

The CPI bias is the point that the CPI o

Question 12

The real interest rate is negative if the inflation rate

Accepted Answer

A) exceeds the nominal interest rate. 
B) exceeds the real interest rate. 
C) is equal to the nominal interest rate. 
D) is less than the nominal interest rate. 
E) equals zero. 
A) exceeds the nominal interest rate. 
B) exceeds the real interest rate. 
C) is equal to the nominal interest rate. 
D) is less than the nominal interest rate. 
E) equals zero.

Question 13

If in Switzerland in January,2009 the CPI was 187.4 and in January,2010 it was 191.1,then the inflation rate in 2010 was

Accepted Answer

A) 1.9 percent. 
B) 3.7 percent. 
C) -1.9 percent. 
D) unknown without the base period index number. 
E) unknown without the real prices. 
A) 1.9 percent. 
B) 3.7 percent. 
C) -1.9 percent. 
D) unknown without the base period index number. 
E) unknown without the real prices.

Question 14

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 the real price of

Accepted Answer

A) a soda has risen 567 percent. 
B) a soda has risen 350 percent. 
C) the 1970 soda in 2007 dollars is 52 cents. 
D) the 2007 soda in 1970 dollars is $3.44. 
E) the soda was 15 cents in 1970 and 50 cents in 2007. 
A) a soda has risen 567 percent. 
B) a soda has risen 350 percent. 
C) the 1970 soda in 2007 dollars is 52 cents. 
D) the 2007 soda in 1970 dollars is $3.44. 
E) the soda was 15 cents in 1970 and 50 cents in 2007.

Question 15

When economists speak of the CPI bias,they are referring to

Accepted Answer

A) the tendency for the CPI to overstate price changes. 
B) the tendency for the CPI to understate price changes. 
C) the tendency for the CPI to understate inflation. 
D) errors in measuring the prices used in the CPI. 
E) the tendency for government officials to impose their values on the data. 
A) the tendency for the CPI to overstate price changes. 
B) the tendency for the CPI to understate price changes. 
C) the tendency for the CPI to understate inflation. 
D) errors in measuring the prices used in the CPI. 
E) the tendency for government officials to impose their values on the data.

Question 16

If we compare the CPI to a perfect cost of living index,we find that they are

Accepted Answer

A) the same thing. 
B) different because the cost of living has nothing to do with prices. 
C) different because the CPI does not measure prices. 
D) different because the CPI uses a fixed basket and has some measurement difficulties. 
E) not the same because the CPI has a fixed reference base period. 
A) the same thing. 
B) different because the cost of living has nothing to do with prices. 
C) different because the CPI does not measure prices. 
D) different because the CPI uses a fixed basket and has some measurement difficulties. 
E) not the same because the CPI has a fixed reference base period.

Question 17

What are the three stages of constructing the CPI?

Accepted Answer

The first stage is to select the CPI mar

Question 18

When we compare the records of the CPI and the PCE price index over time,the

Accepted Answer

A) two are very different in magnitude. 
B) PCE price index tends to exceed the CPI. 
C) CPI tends to exceed the PCE price index. 
D) two measures are identical. 
E) CPI tends to exceed the PCE price index when inflation is high,and the PCE price index tends to exceed the CPI when inflation is low. 
A) two are very different in magnitude. 
B) PCE price index tends to exceed the CPI. 
C) CPI tends to exceed the PCE price index. 
D) two measures are identical. 
E) CPI tends to exceed the PCE price index when inflation is high,and the PCE price index tends to exceed the CPI when inflation is low.

Question 19

Joe buys chicken and beef.If the price of beef rises and the price of chicken does not change,Joe will buy ________ for the CPI.

Accepted Answer

A) more beef and create a new goods bias 
B) more chicken and create a commodity substitution bias 
C) the same quantity of beef and chicken and create a commodity substitution bias 
D) less chicken and beef and create a quality change bias 
E) more chicken and eliminate the commodity substitution bias 
A) more beef and create a new goods bias 
B) more chicken and create a commodity substitution bias 
C) the same quantity of beef and chicken and create a commodity substitution bias 
D) less chicken and beef and create a quality change bias 
E) more chicken and eliminate the commodity substitution bias

Question 20

Consumers in Beachland consume only two goods,sodas and DVDs.If they spend $10 on sodas and $90 on DVDs a month,how many sodas and DVDs are in their CPI market basket if the price of a soda is $1 and the price of a DVD is $9?

Accepted Answer

A) 9 sodas and 1 DVD 
B) 1 soda and 9 DVDs 
C) 10 sodas and 9 DVDs 
D) 10 sodas and 10 DVDs 
E) It is impossible to determine the market basket without information on the quantity of at least one of the two goods consumed. 
A) 9 sodas and 1 DVD 
B) 1 soda and 9 DVDs 
C) 10 sodas and 9 DVDs 
D) 10 sodas and 10 DVDs 
E) It is impossible to determine the market basket without information on the quantity of at least one of the two goods consumed.

During this year,nominal GDP in Syldavia was $720 billion and real GDP was $720 billion.The GDP price index in Syldavia in this year was

The CPI was 225 in 2008 and 232.2 in 2009.The nominal interest rate during this period was 1.4 percent.What was the real interest rate during this period?

The CPI is reported once every

-The data in the table above shows the consumption by families in a small (poor)economy.The families consume only salt and bread.The reference base period is 2011.The inflation rate between 2011 and 2012 is

If you have the cost of the CPI market basket at current prices and the cost of the CPI market basket at base period prices,how do you calculate the CPI?

The CPI is a measure of the

The period for which the Consumer Price Index is defined to equal 100 is called the

The quality change bias is most likely to put into the CPI and so the inflation rate.

The GDP price index equals I.nominal GDP divided by real GDP multiplied by 100. Ii.a measure of the price level. Iii.an average of current prices expressed as a percentage of base-year prices.

Explain the CPI bias and how it can distort private contracts and increase government outlays.

The real interest rate is negative if the inflation rate

If in Switzerland in January,2009 the CPI was 187.4 and in January,2010 it was 191.1,then the inflation rate in 2010 was

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 the real price of

When economists speak of the CPI bias,they are referring to

If we compare the CPI to a perfect cost of living index,we find that they are

What are the three stages of constructing the CPI?

When we compare the records of the CPI and the PCE price index over time,the

Joe buys chicken and beef.If the price of beef rises and the price of chicken does not change,Joe will buy ________ for the CPI.

Consumers in Beachland consume only two goods,sodas and DVDs.If they spend $10 on sodas and $90 on DVDs a month,how many sodas and DVDs are in their CPI market basket if the price of a soda is $1 and the price of a DVD is $9?

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

During this year,nominal GDP in Syldavia was $720 billion and real GDP was $720 billion.The GDP price index in Syldavia in this year was

The CPI was 225 in 2008 and 232.2 in 2009.The nominal interest rate during this period was 1.4 percent.What was the real interest rate during this period?

The CPI is reported once every

-The data in the table above shows the consumption by families in a small (poor)economy.The families consume only salt and bread.The reference base period is 2011.The inflation rate between 2011 and 2012 is

If you have the cost of the CPI market basket at current prices and the cost of the CPI market basket at base period prices,how do you calculate the CPI?

The CPI is a measure of the

The period for which the Consumer Price Index is defined to equal 100 is called the

The quality change bias is most likely to put ________ into the CPI and so ________ the inflation rate.

The GDP price index equals I.nominal GDP divided by real GDP multiplied by 100. Ii.a measure of the price level. Iii.an average of current prices expressed as a percentage of base-year prices.

Explain the CPI bias and how it can distort private contracts and increase government outlays.

The real interest rate is negative if the inflation rate

If in Switzerland in January,2009 the CPI was 187.4 and in January,2010 it was 191.1,then the inflation rate in 2010 was

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 the real price of

When economists speak of the CPI bias,they are referring to

If we compare the CPI to a perfect cost of living index,we find that they are

What are the three stages of constructing the CPI?

When we compare the records of the CPI and the PCE price index over time,the

Joe buys chicken and beef.If the price of beef rises and the price of chicken does not change,Joe will buy ________ for the CPI.

Consumers in Beachland consume only two goods,sodas and DVDs.If they spend $10 on sodas and $90 on DVDs a month,how many sodas and DVDs are in their CPI market basket if the price of a soda is $1 and the price of a DVD is $9?

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

The quality change bias is most likely to put into the CPI and so the inflation rate.