Question 1

The CPI bias was estimated by the Congressional Advisory Commission on the Consumer Price Index as

Accepted Answer

A) understating the actual inflation rate by about 5 percentage points a year. 
B) understating the actual inflation rate by more than 5 percentage points a year. 
C) overstating the actual inflation rate by about 1 percentage point a year. 
D) overstating the actual inflation rate by more than 5 percentage points a year. 
E) understating the actual inflation rate by about 1 percentage point a year. 
A) understating the actual inflation rate by about 5 percentage points a year. 
B) understating the actual inflation rate by more than 5 percentage points a year. 
C) overstating the actual inflation rate by about 1 percentage point a year. 
D) overstating the actual inflation rate by more than 5 percentage points a year. 
E) understating the actual inflation rate by about 1 percentage point a year.

Question 2

What is the commodity substitution bias? What effect does it have on the CPI?

Accepted Answer

The commodity substitution bias refers t

Question 3

If the CPI is 170 at the beginning of the year and 181 at the end,and a bank is paying a nominal interest rate of 6 percent,we see that

Accepted Answer

A) the real interest rate is negative. 
B) the interest nominal rate is negative. 
C) the real interest rate is positive and is less than 1 percent. 
D) the real interest rate is positive and is larger than 1 percent. 
E) the real interest rate is equal to zero. 
A) the real interest rate is negative. 
B) the interest nominal rate is negative. 
C) the real interest rate is positive and is less than 1 percent. 
D) the real interest rate is positive and is larger than 1 percent. 
E) the real interest rate is equal to zero.

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 CPI in 2012 is

Accepted Answer

A) 100. 
B) 118.8 
C) 123.1 
D) 23.1 
E) 18.8 
A) 100. 
B) 118.8 
C) 123.1 
D) 23.1 
E) 18.8

Question 5

According to the CPI basket,the largest item in the households' budgets is

Accepted Answer

A) food. 
B) housing. 
C) transportation. 
D) education. 
E) apparel. 
A) food. 
B) housing. 
C) transportation. 
D) education. 
E) apparel.

Question 6

Last year the CPI was 177.1 and this year the CPI was 180.9.What is the inflation rate between these two years?

Accepted Answer

The inflation rate e

Question 7

Which of the following changes would have the largest impact on the CPI?

Accepted Answer

A) a one percent increase in the cost of housing 
B) a one percent increase in the cost of transportation 
C) a one percent increase in the cost of medical care 
D) a one percent increase in the cost of education 
E) a one percent increase in the cost of apparel 
A) a one percent increase in the cost of housing 
B) a one percent increase in the cost of transportation 
C) a one percent increase in the cost of medical care 
D) a one percent increase in the cost of education 
E) a one percent increase in the cost of apparel

Question 8

In the United States between 1973 and 2013,the inflation rate

Accepted Answer

A) increased every year. 
B) only decreased during the late 1990s. 
C) only increased during the late 1970s and 1980. 
D) peaked during the late 1970s and 1980 and was at its generally lowest in the 1990s and 2000s. 
E) has been relatively constant at approximately 4 percent to 6 percent per year. 
A) increased every year. 
B) only decreased during the late 1990s. 
C) only increased during the late 1970s and 1980. 
D) peaked during the late 1970s and 1980 and was at its generally lowest in the 1990s and 2000s. 
E) has been relatively constant at approximately 4 percent to 6 percent per year.

Question 9

A ham and cheese sandwich at the local deli costs $4.99 in 2005.If the CPI in 2005 was 90.0 and the CPI today is 121.0,the equivalent price for the ham and cheese sandwich today is

Accepted Answer

A) $4.99. 
B) $5.54. 
C) $5.29. 
D) $6.71. 
E) $6.04. 
A) $4.99. 
B) $5.54. 
C) $5.29. 
D) $6.71. 
E) $6.04.

Question 10

An example of the new goods bias in the calculation of the CPI is a price increase in

Accepted Answer

A) butter relative to margarine. 
B) an iPod player relative to a Walkman. 
C) a 2013 Honda Civic Si Coupe relative to a 2013 Honda Civic Si Sedan. 
D) textbooks bought through the campus bookstore relative to textbooks bought through Amazon.com. 
E) a Caribbean cruise for a couple who has never been on a cruise before. 
A) butter relative to margarine. 
B) an iPod player relative to a Walkman. 
C) a 2013 Honda Civic Si Coupe relative to a 2013 Honda Civic Si Sedan. 
D) textbooks bought through the campus bookstore relative to textbooks bought through Amazon.com. 
E) a Caribbean cruise for a couple who has never been on a cruise before.

Question 11

The fact that the CPI is a biased measure of the inflation rate means government outlays will

Accepted Answer

A) increase at a faster rate than the actual inflation rate. 
B) increase at the same rate as the actual inflation rate. 
C) increase at a slower rate than the actual inflation rate. 
D) sometimes increase faster and sometimes increase slower than the actual inflation rate depending on whether the actual inflation rate exceeds 1.1 percent per year or is less than 1.1 percent per year. 
E) None of the above because the bias in inflation measured using the CPI has nothing to do with government outlays. 
A) increase at a faster rate than the actual inflation rate. 
B) increase at the same rate as the actual inflation rate. 
C) increase at a slower rate than the actual inflation rate. 
D) sometimes increase faster and sometimes increase slower than the actual inflation rate depending on whether the actual inflation rate exceeds 1.1 percent per year or is less than 1.1 percent per year. 
E) None of the above because the bias in inflation measured using the CPI has nothing to do with government outlays.

Question 12

Suppose the CPI last year was 82.3 and this year is 90.9.Based on this information,we can calculate that the inflation rate in 1981 was

Accepted Answer

A) 10.4 percent. 
B) 8.6 percent. 
C) 90.9 percent. 
D) 82.3 percent. 
E) 9.09 percent. 
A) 10.4 percent. 
B) 8.6 percent. 
C) 90.9 percent. 
D) 82.3 percent. 
E) 9.09 percent.

Question 13

The outlet substitution bias is most likely to put ________ and so ________ the inflation rate.

Accepted Answer

A) a downward bias into the CPI;understate 
B) an upward bias into the CPI;understate 
C) an upward bias into the CPI;overstate 
D) a downward bias into the CPI;overstate 
E) no bias into the CPI because it is such a small effect;have no effect on 
A) a downward bias into the CPI;understate 
B) an upward bias into the CPI;understate 
C) an upward bias into the CPI;overstate 
D) a downward bias into the CPI;overstate 
E) no bias into the CPI because it is such a small effect;have no effect on

Question 14

If we look back at inflation data since 1300,we see that

Accepted Answer

A) during the 20th century we have finally solved the problem of high inflation. 
B) the Industrial Revolution caused the highest inflation rates. 
C) the discovery of America caused prices to fall drastically. 
D) inflation has been highest in the 20th and 21st centuries. 
E) the most rapid inflation occurred prior to 1600. 
A) during the 20th century we have finally solved the problem of high inflation. 
B) the Industrial Revolution caused the highest inflation rates. 
C) the discovery of America caused prices to fall drastically. 
D) inflation has been highest in the 20th and 21st centuries. 
E) the most rapid inflation occurred prior to 1600.

Question 15

If a country had a CPI of 105.0 last year and a CPI of 102.0 this year,then

Accepted Answer

A) the average prices of goods and services increased between last year and this year. 
B) the average prices of goods and services decreased between last year and this year. 
C) the average quality of goods and services decreased between last year and this year. 
D) there was an error when calculating the CPI this year. 
E) the quantity of consumer goods and services produced decreased between last year and this year. 
A) the average prices of goods and services increased between last year and this year. 
B) the average prices of goods and services decreased between last year and this year. 
C) the average quality of goods and services decreased between last year and this year. 
D) there was an error when calculating the CPI this year. 
E) the quantity of consumer goods and services produced decreased between last year and this year.

Question 16

The Consumer Price Index (CPI)measures the changes of the

Accepted Answer

A) prices paid by consumers for a fixed market basket of consumer goods and services. 
B) quantities of a fixed market basket of goods produced by businesses. 
C) lowest prices paid by consumers for a fixed market basket of consumer goods and services. 
D) prices paid by all businesses for a fixed market basket of production resources. 
E) prices paid by consumers and businesses for a fixed market basket of goods and services. 
A) prices paid by consumers for a fixed market basket of consumer goods and services. 
B) quantities of a fixed market basket of goods produced by businesses. 
C) lowest prices paid by consumers for a fixed market basket of consumer goods and services. 
D) prices paid by all businesses for a fixed market basket of production resources. 
E) prices paid by consumers and businesses for a fixed market basket of goods and services.

Question 17

When firms decide how much labor to hire,one of the factors that influences them is the

Accepted Answer

A) nominal wage rate plus the inflation rate. 
B) nominal wage rate divided by the price level and then multiplied by 100. 
C) nominal wage rate minus the inflation rate. 
D) real wage rate plus the inflation rate. 
E) nominal wage rate divided by the inflation rate and then multiplied by 100. 
A) nominal wage rate plus the inflation rate. 
B) nominal wage rate divided by the price level and then multiplied by 100. 
C) nominal wage rate minus the inflation rate. 
D) real wage rate plus the inflation rate. 
E) nominal wage rate divided by the inflation rate and then multiplied by 100.

Question 18

-The table above gives the purchases of an average consumer in a small economy.(These consumers purchase only loaves of bread and jugs of soda. )Suppose 2010 is the reference base period.
a.What quantities are in the CPI market basket?
b.What is the cost of the CPI market basket using 2010 prices?
c.What is the cost of the CPI market basket using 2011 prices?
d.What is the CPI in 2011?

Accepted Answer

a.The quantities in the CPI market baske

Question 19

Suppose a report from the Bureau of Labor Statistics states that the CPI for the year 2012 was 152.What is the percentage point increase in the prices of the goods and services since the reference base period?

Accepted Answer

A) 152 percent 
B) 52 percent 
C) 100 percent 
D) 48 percent 
E) 252 percent 
A) 152 percent 
B) 52 percent 
C) 100 percent 
D) 48 percent 
E) 252 percent

Question 20

The value of the CPI for the reference base period is always

Accepted Answer

A) 100. 
B) 0. 
C) 1. 
D) 50. 
E) None of the above,because the value of the CPI is not always the same for all reference base periods. 
A) 100. 
B) 0. 
C) 1. 
D) 50. 
E) None of the above,because the value of the CPI is not always the same for all reference base periods.

The CPI bias was estimated by the Congressional Advisory Commission on the Consumer Price Index as

What is the commodity substitution bias? What effect does it have on the CPI?

If the CPI is 170 at the beginning of the year and 181 at the end,and a bank is paying a nominal interest rate of 6 percent,we see that

-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 CPI in 2012 is

According to the CPI basket,the largest item in the households' budgets is

Last year the CPI was 177.1 and this year the CPI was 180.9.What is the inflation rate between these two years?

Which of the following changes would have the largest impact on the CPI?

In the United States between 1973 and 2013,the inflation rate

A ham and cheese sandwich at the local deli costs $4.99 in 2005.If the CPI in 2005 was 90.0 and the CPI today is 121.0,the equivalent price for the ham and cheese sandwich today is

An example of the new goods bias in the calculation of the CPI is a price increase in

The fact that the CPI is a biased measure of the inflation rate means government outlays will

Suppose the CPI last year was 82.3 and this year is 90.9.Based on this information,we can calculate that the inflation rate in 1981 was

The outlet substitution bias is most likely to put and so the inflation rate.

If we look back at inflation data since 1300,we see that

If a country had a CPI of 105.0 last year and a CPI of 102.0 this year,then

The Consumer Price Index (CPI)measures the changes of the

When firms decide how much labor to hire,one of the factors that influences them is the

Suppose a report from the Bureau of Labor Statistics states that the CPI for the year 2012 was 152.What is the percentage point increase in the prices of the goods and services since the reference base period?

The value of the CPI for the reference base period is always

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

The CPI bias was estimated by the Congressional Advisory Commission on the Consumer Price Index as

What is the commodity substitution bias? What effect does it have on the CPI?

If the CPI is 170 at the beginning of the year and 181 at the end,and a bank is paying a nominal interest rate of 6 percent,we see that

-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 CPI in 2012 is

According to the CPI basket,the largest item in the households' budgets is

Last year the CPI was 177.1 and this year the CPI was 180.9.What is the inflation rate between these two years?

Which of the following changes would have the largest impact on the CPI?

In the United States between 1973 and 2013,the inflation rate

A ham and cheese sandwich at the local deli costs $4.99 in 2005.If the CPI in 2005 was 90.0 and the CPI today is 121.0,the equivalent price for the ham and cheese sandwich today is

An example of the new goods bias in the calculation of the CPI is a price increase in

The fact that the CPI is a biased measure of the inflation rate means government outlays will

Suppose the CPI last year was 82.3 and this year is 90.9.Based on this information,we can calculate that the inflation rate in 1981 was

The outlet substitution bias is most likely to put ________ and so ________ the inflation rate.

If we look back at inflation data since 1300,we see that

If a country had a CPI of 105.0 last year and a CPI of 102.0 this year,then

The Consumer Price Index (CPI)measures the changes of the

When firms decide how much labor to hire,one of the factors that influences them is the

Suppose a report from the Bureau of Labor Statistics states that the CPI for the year 2012 was 152.What is the percentage point increase in the prices of the goods and services since the reference base period?

The value of the CPI for the reference base period is always

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 outlet substitution bias is most likely to put and so the inflation rate.