Question 1

To measure the CPI,the BLS economic assistants check the prices of

Accepted Answer

A) about 8,000 goods and services every year. 
B) about 8,000 goods and services every month. 
C) about 80,000 goods and services every month. 
D) about 80,000 goods and services every year. 
E) only the goods and services whose prices have changed every month. 
A) about 8,000 goods and services every year. 
B) about 8,000 goods and services every month. 
C) about 80,000 goods and services every month. 
D) about 80,000 goods and services every year. 
E) only the goods and services whose prices have changed every month.

Question 2

The prices of the goods and services in the CPI market basket are collected

Accepted Answer

A) monthly. 
B) yearly. 
C) quarterly. 
D) infrequently. 
E) only when the CPI market basket is determined by the Consumer Expenditure Survey. 
A) monthly. 
B) yearly. 
C) quarterly. 
D) infrequently. 
E) only when the CPI market basket is determined by the Consumer Expenditure Survey.

Question 3

Explain the difference between a nominal value and a real value.

Accepted Answer

A nominal value is the actual price that

Question 4

Sharisse brags to her mother that her starting salary as a management trainee is $36,000,much higher than her mother's starting salary of $21,000 as a management trainee several years ago.If the CPI the year Sharisse begins work is 181.2 and the CPI the year her mother started work was 109.1,Sharisse is

Accepted Answer

A) wrong.Adjusting for price changes,her salary is less than her mother's salary. 
B) wrong.Adjusting for quantity changes,her salary is less than her mother's salary. 
C) correct.Adjusting for price changes,her salary is more than her mother's salary. 
D) correct.Adjusting for quantity changes,her salary is more than her mother's salary. 
E) maybe wrong and maybe right.Adjusting for quantity changes,her salary is less than her mother's salary but with the information given we are unable to further adjust for price changes. 
A) wrong.Adjusting for price changes,her salary is less than her mother's salary. 
B) wrong.Adjusting for quantity changes,her salary is less than her mother's salary. 
C) correct.Adjusting for price changes,her salary is more than her mother's salary. 
D) correct.Adjusting for quantity changes,her salary is more than her mother's salary. 
E) maybe wrong and maybe right.Adjusting for quantity changes,her salary is less than her mother's salary but with the information given we are unable to further adjust for price changes.

Question 5

In 2008,the nominal minimum wage rate was $7.25 an hour and the CPI was 200.The real minimum wage rate in 2008 was

Accepted Answer

A) $3.63 an hour. 
B) $14.50 an hour. 
C) $1450 an hour. 
D) $26.32 an hour. 
E) $7.25 an hour. 
A) $3.63 an hour. 
B) $14.50 an hour. 
C) $1450 an hour. 
D) $26.32 an hour. 
E) $7.25 an hour.

Question 6

When the price of broccoli increase relative to cauliflower,people who buy fresh vegetables respond by buying more cauliflower and fewer broccoli.As a result,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 new price bias. 
A) a new goods bias. 
B) a quality change bias. 
C) a commodity substitution bias. 
D) an outlet substitution bias. 
E) a new price bias.

Question 7

"The real interest rate is found by dividing the nominal interest rate by the CPI." Is this statement true or false?

Accepted Answer

The statement is false.The rea

Question 8

The bias in the CPI distorts private contracts because

Accepted Answer

A) a future payment that is linked to the CPI is likely to be raised above the true increase in the price level. 
B) a worker that links her salary to the CPI is likely to be worse off than a worker that doesn't link her salary to the CPI. 
C) a lender that links the interest payments on the loan to the CPI is likely to be worse off than a lender that does not link the interest payments on the loan to the CPI. 
D) a future increase in a payment that is linked to the CPI is likely to be less than the true increase in the price level. 
E) the CPI cannot properly account for what goods and services a typical urban consumer buys. 
A) a future payment that is linked to the CPI is likely to be raised above the true increase in the price level. 
B) a worker that links her salary to the CPI is likely to be worse off than a worker that doesn't link her salary to the CPI. 
C) a lender that links the interest payments on the loan to the CPI is likely to be worse off than a lender that does not link the interest payments on the loan to the CPI. 
D) a future increase in a payment that is linked to the CPI is likely to be less than the true increase in the price level. 
E) the CPI cannot properly account for what goods and services a typical urban consumer buys.

Question 9

In 1970 the CPI was 39,and in 2000 it was 172.A local phone call cost $0.10 in 1970.What is the price of this phone call in 2000 dollars?

Accepted Answer

A) $1.42 
B) $0.39 
C) $1.72 
D) $0.44 
E) $0.23 
A) $1.42 
B) $0.39 
C) $1.72 
D) $0.44 
E) $0.23

Question 10

Suppose the Bureau of Labor Statistics uses Ballpark Franks as the hot dogs used when calculating the consumer price index.During 2012,Oscar Mayer aggressively reduces prices.Consumers respond by purchasing more Oscar Mayer and less Ballpark Franks.The 2012 CPI is likely to

Accepted Answer

A) overstate the average prices paid by consumers. 
B) overstate the average prices paid by businesses. 
C) understate the average prices paid by consumers. 
D) understate the average prices paid by businesses. 
E) neither understate nor overstate the average prices because some consumers will still buy Ballpark Franks. 
A) overstate the average prices paid by consumers. 
B) overstate the average prices paid by businesses. 
C) understate the average prices paid by consumers. 
D) understate the average prices paid by businesses. 
E) neither understate nor overstate the average prices because some consumers will still buy Ballpark Franks.

Question 11

During 1990,a Hershey candy bar cost $.85.By 2007,the same Hershey candy bar cost $1.25.If the CPI was 130.7 in 1990 and 180.5 in 2007,the price of the 1990 Hershey candy bar in 2007 prices is

Accepted Answer

A) greater than the price of the 2007 Hershey candy bar. 
B) less than the price of the 2007 Hershey candy bar. 
C) equivalent to the price of the 2007 Hershey candy bar. 
D) perhaps greater than,perhaps less,or perhaps the same depending on whether the CPI in 2007 has been adjusted to reflect 2007 prices. 
E) not able to be determined given the information in the question. 
A) greater than the price of the 2007 Hershey candy bar. 
B) less than the price of the 2007 Hershey candy bar. 
C) equivalent to the price of the 2007 Hershey candy bar. 
D) perhaps greater than,perhaps less,or perhaps the same depending on whether the CPI in 2007 has been adjusted to reflect 2007 prices. 
E) not able to be determined given the information in the question.

Question 12

If the price index last year was 100 and today it is 167,what is the inflation rate over this period?

Accepted Answer

A) -67 percent 
B) -6.7 percent 
C) 33 percent 
D) 67 percent 
E) 167 percent 
A) -67 percent 
B) -6.7 percent 
C) 33 percent 
D) 67 percent 
E) 167 percent

Question 13

If your nominal income is $75,000 and your real income in base year prices is $60,000,what is the CPI?

Accepted Answer

A) 100 
B) 125 
C) 80 
D) 250 
E) 200 
A) 100 
B) 125 
C) 80 
D) 250 
E) 200

Question 14

Is the CPI a biased measure of the inflation rate? Explain your answer.

Accepted Answer

There are four sources of bias in the CP

Question 15

What is the good or service is given the most weight in the CPI?

Accepted Answer

A) apparel 
B) food and beverages 
C) housing 
D) transportation 
E) recreation 
A) apparel 
B) food and beverages 
C) housing 
D) transportation 
E) recreation

Question 16

In February 2010,the price of gasoline in the Florida was $2.629 per gallon and the CPI was 202.4 with a base period of 1982 to 1984.What was the real price of gasoline per gallon in base period dollars?

Accepted Answer

A) $2.629 per gallon 
B) $1.00 per gallon 
C) $1.29 per gallon 
D) $5.32 per gallon 
E) $1.809 per gallon 
A) $2.629 per gallon 
B) $1.00 per gallon 
C) $1.29 per gallon 
D) $5.32 per gallon 
E) $1.809 per gallon

Question 17

The price survey of the goods contained in the CPI market basket is conducted

Accepted Answer

A) every ten years,along with the Census. 
B) infrequently,because of its high cost. 
C) every year. 
D) monthly. 
E) every quarter. 
A) every ten years,along with the Census. 
B) infrequently,because of its high cost. 
C) every year. 
D) monthly. 
E) every quarter.

Question 18

If the cost of the CPI market basket at current period prices is $1000 and the cost of the CPI market basket at base period prices is $250,the CPI is

Accepted Answer

A) 4.0. 
B) 400. 
C) 250. 
D) 100. 
E) 2.50. 
A) 4.0. 
B) 400. 
C) 250. 
D) 100. 
E) 2.50.

Question 19

In the United States,the good or service given the most weight in the CPI basket when calculating the CPI is

Accepted Answer

A) food and beverages. 
B) taxes. 
C) housing. 
D) medical care. 
E) recreation. 
A) food and beverages. 
B) taxes. 
C) housing. 
D) medical care. 
E) recreation.

Question 20

If prices have increased since the base period,then

Accepted Answer

A) real GDP is smaller than nominal GDP. 
B) real GDP is larger than nominal GDP. 
C) real GDP is equal to nominal GDP. 
D) there is no way to adjust nominal GDP so that it equals real GDP. 
E) real GDP can no longer be compared to nominal GDP. 
A) real GDP is smaller than nominal GDP. 
B) real GDP is larger than nominal GDP. 
C) real GDP is equal to nominal GDP. 
D) there is no way to adjust nominal GDP so that it equals real GDP. 
E) real GDP can no longer be compared to nominal GDP.

To measure the CPI,the BLS economic assistants check the prices of

The prices of the goods and services in the CPI market basket are collected

Explain the difference between a nominal value and a real value.

In 2008,the nominal minimum wage rate was $7.25 an hour and the CPI was 200.The real minimum wage rate in 2008 was

When the price of broccoli increase relative to cauliflower,people who buy fresh vegetables respond by buying more cauliflower and fewer broccoli.As a result,the CPI has

"The real interest rate is found by dividing the nominal interest rate by the CPI." Is this statement true or false?

The bias in the CPI distorts private contracts because

In 1970 the CPI was 39,and in 2000 it was 172.A local phone call cost $0.10 in 1970.What is the price of this phone call in 2000 dollars?

Suppose the Bureau of Labor Statistics uses Ballpark Franks as the hot dogs used when calculating the consumer price index.During 2012,Oscar Mayer aggressively reduces prices.Consumers respond by purchasing more Oscar Mayer and less Ballpark Franks.The 2012 CPI is likely to

During 1990,a Hershey candy bar cost $.85.By 2007,the same Hershey candy bar cost $1.25.If the CPI was 130.7 in 1990 and 180.5 in 2007,the price of the 1990 Hershey candy bar in 2007 prices is

If the price index last year was 100 and today it is 167,what is the inflation rate over this period?

If your nominal income is $75,000 and your real income in base year prices is $60,000,what is the CPI?

Is the CPI a biased measure of the inflation rate? Explain your answer.

What is the good or service is given the most weight in the CPI?

In February 2010,the price of gasoline in the Florida was $2.629 per gallon and the CPI was 202.4 with a base period of 1982 to 1984.What was the real price of gasoline per gallon in base period dollars?

The price survey of the goods contained in the CPI market basket is conducted

If the cost of the CPI market basket at current period prices is $1000 and the cost of the CPI market basket at base period prices is $250,the CPI is

In the United States,the good or service given the most weight in the CPI basket when calculating the CPI is

If prices have increased since the base period,then

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

To measure the CPI,the BLS economic assistants check the prices of

The prices of the goods and services in the CPI market basket are collected

Explain the difference between a nominal value and a real value.

In 2008,the nominal minimum wage rate was $7.25 an hour and the CPI was 200.The real minimum wage rate in 2008 was

When the price of broccoli increase relative to cauliflower,people who buy fresh vegetables respond by buying more cauliflower and fewer broccoli.As a result,the CPI has

"The real interest rate is found by dividing the nominal interest rate by the CPI." Is this statement true or false?

The bias in the CPI distorts private contracts because

In 1970 the CPI was 39,and in 2000 it was 172.A local phone call cost $0.10 in 1970.What is the price of this phone call in 2000 dollars?

Suppose the Bureau of Labor Statistics uses Ballpark Franks as the hot dogs used when calculating the consumer price index.During 2012,Oscar Mayer aggressively reduces prices.Consumers respond by purchasing more Oscar Mayer and less Ballpark Franks.The 2012 CPI is likely to

During 1990,a Hershey candy bar cost $.85.By 2007,the same Hershey candy bar cost $1.25.If the CPI was 130.7 in 1990 and 180.5 in 2007,the price of the 1990 Hershey candy bar in 2007 prices is

If the price index last year was 100 and today it is 167,what is the inflation rate over this period?

If your nominal income is $75,000 and your real income in base year prices is $60,000,what is the CPI?

Is the CPI a biased measure of the inflation rate? Explain your answer.

What is the good or service is given the most weight in the CPI?

In February 2010,the price of gasoline in the Florida was $2.629 per gallon and the CPI was 202.4 with a base period of 1982 to 1984.What was the real price of gasoline per gallon in base period dollars?

The price survey of the goods contained in the CPI market basket is conducted

If the cost of the CPI market basket at current period prices is $1000 and the cost of the CPI market basket at base period prices is $250,the CPI is

In the United States,the good or service given the most weight in the CPI basket when calculating the CPI is

If prices have increased since the base period,then

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