Question 1

All of the following can create a bias in the CPI EXCEPT the

Accepted Answer

A) new goods bias. 
B) outlet substitution bias. 
C) commodity substitution bias. 
D) GDP price index bias. 
E) quality change bias. 
A) new goods bias. 
B) outlet substitution bias. 
C) commodity substitution bias. 
D) GDP price index bias. 
E) quality change bias.

Question 2

"The market basket used to calculate the CPI is revised monthly to more accurately depict consumers' choices.The price data for the CPI are collected every month." Are the previous sentences true or false?

Accepted Answer

The first sentence is false and the seco

Question 3

An example of the quality change bias,and not a new goods bias,in the calculation of the CPI is a price increase in

Accepted Answer

A) Coke versus Pepsi. 
B) DVDs purchased on Craigslist,an online classified website. 
C) a 2013 GPS unit versus a 2008 GPS unit. 
D) etexts versus used books . 
E) pants purchased by a first-time shopper at Aeropostale. 
A) Coke versus Pepsi. 
B) DVDs purchased on Craigslist,an online classified website. 
C) a 2013 GPS unit versus a 2008 GPS unit. 
D) etexts versus used books . 
E) pants purchased by a first-time shopper at Aeropostale.

Question 4

Each month the CPI is calculated by

Accepted Answer

A) recording the new prices and making no other calculation. 
B) multiplying the current cost of the CPI market basket by the base period cost and then dividing by 100. 
C) subtracting the base period cost of the CPI market basket from the current cost and then dividing by 100. 
D) dividing the current cost of the CPI market basket by the base period cost and then multiplying by 100. 
E) subtracting the current period cost of the CPI market basket from the base period cost and then multiplying by 100. 
A) recording the new prices and making no other calculation. 
B) multiplying the current cost of the CPI market basket by the base period cost and then dividing by 100. 
C) subtracting the base period cost of the CPI market basket from the current cost and then dividing by 100. 
D) dividing the current cost of the CPI market basket by the base period cost and then multiplying by 100. 
E) subtracting the current period cost of the CPI market basket from the base period cost and then multiplying by 100.

Question 5

In 2001,Pablo earned $200 per week at his job.In 2011,Pablo earned $240 per week.If the CPI in 2001 was 100 and the CPI in 2011 was 152,then

Accepted Answer

A) Pablo was better off in 2011 because his weekly wage was higher. 
B) the 2001 wage measured in 2011 dollars is $157.89. 
C) the 2011 wage measured in 2001 dollars is $157.89. 
D) the 2001 wage measured in 2011 dollars is $131.58. 
E) the 2001 wage measured in 2011 dollars is $100. 
A) Pablo was better off in 2011 because his weekly wage was higher. 
B) the 2001 wage measured in 2011 dollars is $157.89. 
C) the 2011 wage measured in 2001 dollars is $157.89. 
D) the 2001 wage measured in 2011 dollars is $131.58. 
E) the 2001 wage measured in 2011 dollars is $100.

Question 6

In 2012,the nominal wage rate for unionized carpenters was $37.50 and the CPI was 204.Calculate the real wage rate for this group of workers.

Accepted Answer

A) $37.50 
B) $47.09 
C) $5.44 
D) $18.38 
E) $1.84 
A) $37.50 
B) $47.09 
C) $5.44 
D) $18.38 
E) $1.84

Question 7

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 2010 is

Accepted Answer

A) 96.6. 
B) 100.0. 
C) 103.5. 
D) 106.5. 
E) 23.0. 
A) 96.6. 
B) 100.0. 
C) 103.5. 
D) 106.5. 
E) 23.0.

Question 8

In 2008,Cameron began his career with SBC.His starting salary was $32,000.By 2012,his salary increased to $35,000.If the CPI was 100.0 in 2008 and 107.5 in 2012,Cameron's 2012 real income is

Accepted Answer

A) $32,000. 
B) $32,558. 
C) $34,400. 
D) $37,625. 
E) $35,000. 
A) $32,000. 
B) $32,558. 
C) $34,400. 
D) $37,625. 
E) $35,000.

Question 9

Citicorp charges an 11 percent interest rate on all new car loans.If the inflation rate is 6 percent,Citicorp receives a real interest rate of

Accepted Answer

A) 11 percent. 
B) 6 percent. 
C) 1.83 percent. 
D) 5 percent. 
E) 0.54 percent. 
A) 11 percent. 
B) 6 percent. 
C) 1.83 percent. 
D) 5 percent. 
E) 0.54 percent.

Question 10

The CPI was 170 last year and is 190 this year.What is the inflation rate between these two years?

Accepted Answer

A) 10.5 percent 
B) 20 percent 
C) 11.8 percent 
D) 18 percent 
E) 15.0 percent 
A) 10.5 percent 
B) 20 percent 
C) 11.8 percent 
D) 18 percent 
E) 15.0 percent

Question 11

The CPI market basket

Accepted Answer

A) contains one unit of each good purchased by the average consumer. 
B) weights the goods and services according to the budget of an average urban household. 
C) is comprised of a representative sample of the goods that the government guesses people buy. 
D) includes only goods and not services. 
E) includes only U.S.-produced goods and services. 
A) contains one unit of each good purchased by the average consumer. 
B) weights the goods and services according to the budget of an average urban household. 
C) is comprised of a representative sample of the goods that the government guesses people buy. 
D) includes only goods and not services. 
E) includes only U.S.-produced goods and services.

Question 12

The reference base period that the BLS uses to measure the CPI is

Accepted Answer

A) 1982-1984. 
B) 1993-1995. 
C) 1998-2000. 
D) 1967-1969. 
E) 2005. 
A) 1982-1984. 
B) 1993-1995. 
C) 1998-2000. 
D) 1967-1969. 
E) 2005.

Question 13

If the base year CPI market basket costs $250 and next year the CPI market basket costs $275,what is next year's CPI?

Accepted Answer

The CPI eq

Question 14

The Consumer Expenditure Survey measures

Accepted Answer

A) households' spending patterns. 
B) the wholesale price on what consumers buy so that a markup percentage can be found. 
C) the maximum price buyers will pay for a good or service. 
D) consumers' incomes. 
E) the jobs at which consumers work. 
A) households' spending patterns. 
B) the wholesale price on what consumers buy so that a markup percentage can be found. 
C) the maximum price buyers will pay for a good or service. 
D) consumers' incomes. 
E) the jobs at which consumers work.

Question 15

If there is inflation and we compare the changes in a nominal variable over time versus its real counterpart,such as the nominal wage rate versus the real wage rate,we find that the

Accepted Answer

A) two increase at about the same rate because of inflation. 
B) real wage rate increases faster because of inflation. 
C) nominal wage rate increases faster because of inflation. 
D) two decrease at about the same rate because of inflation. 
E) two change at a rate that does not depend on the inflation rate. 
A) two increase at about the same rate because of inflation. 
B) real wage rate increases faster because of inflation. 
C) nominal wage rate increases faster because of inflation. 
D) two decrease at about the same rate because of inflation. 
E) two change at a rate that does not depend on the inflation rate.

Question 16

In a small,agricultural nation,consumers buy only steak and potatoes.In 2009,the base year,the typical consumer spent $potatoes on strawberries and $100 on steak.The price of potatoes is $1 and the price of steak is $2 in 2009.In 2009,the price of potatoes is $2 and the price of steak is $1.The CPI for 2010 is

Accepted Answer

A) 80. 
B) 125. 
C) 100. 
D) 110. 
E) 25 percent. 
A) 80. 
B) 125. 
C) 100. 
D) 110. 
E) 25 percent.

Question 17

If the nominal wage is $30 in 2011 and the CPI is 202 in 2011,then the real wage in 1982-1984 dollars

Accepted Answer

A) is $30. 
B) is $14.85. 
C) is $1.48. 
D) is $29.00. 
E) cannot be calculated without the past year wage rate. 
A) is $30. 
B) is $14.85. 
C) is $1.48. 
D) is $29.00. 
E) cannot be calculated without the past year wage rate.

Question 18

Which of the following is a bias in the CPI?
I.new goods bias
Ii.index change bias
Iii.commodity substitution bias

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 19

Which of the following makes the Consumer Price Index a less accurate measure of the cost of living?
I.The monthly price survey conducted to collect information about prices is very unreliable.
Ii.The existence of a new goods bias in the calculation of the CPI
Iii.The existence of a quality change bias in the calculation of the CPI

Accepted Answer

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

Question 20

If the CPI this year is 240 and the CPI in the previous year was 200,what is the annual inflation rate?

Accepted Answer

A) 40.0 percent 
B) 20.0 percent 
C) 50 percent 
D) 16.7 percent. 
E) -16.7 percent 
A) 40.0 percent 
B) 20.0 percent 
C) 50 percent 
D) 16.7 percent. 
E) -16.7 percent

All of the following can create a bias in the CPI EXCEPT the

"The market basket used to calculate the CPI is revised monthly to more accurately depict consumers' choices.The price data for the CPI are collected every month." Are the previous sentences true or false?

An example of the quality change bias,and not a new goods bias,in the calculation of the CPI is a price increase in

Each month the CPI is calculated by

In 2001,Pablo earned $200 per week at his job.In 2011,Pablo earned $240 per week.If the CPI in 2001 was 100 and the CPI in 2011 was 152,then

In 2012,the nominal wage rate for unionized carpenters was $37.50 and the CPI was 204.Calculate the real wage rate for this group of workers.

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 2010 is

In 2008,Cameron began his career with SBC.His starting salary was $32,000.By 2012,his salary increased to $35,000.If the CPI was 100.0 in 2008 and 107.5 in 2012,Cameron's 2012 real income is

Citicorp charges an 11 percent interest rate on all new car loans.If the inflation rate is 6 percent,Citicorp receives a real interest rate of

The CPI was 170 last year and is 190 this year.What is the inflation rate between these two years?

The CPI market basket

The reference base period that the BLS uses to measure the CPI is

If the base year CPI market basket costs $250 and next year the CPI market basket costs $275,what is next year's CPI?

The Consumer Expenditure Survey measures

If there is inflation and we compare the changes in a nominal variable over time versus its real counterpart,such as the nominal wage rate versus the real wage rate,we find that the

If the nominal wage is $30 in 2011 and the CPI is 202 in 2011,then the real wage in 1982-1984 dollars

Which of the following is a bias in the CPI? I.new goods bias Ii.index change bias Iii.commodity substitution bias

If the CPI this year is 240 and the CPI in the previous year was 200,what is the annual inflation rate?

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

All of the following can create a bias in the CPI EXCEPT the

"The market basket used to calculate the CPI is revised monthly to more accurately depict consumers' choices.The price data for the CPI are collected every month." Are the previous sentences true or false?

An example of the quality change bias,and not a new goods bias,in the calculation of the CPI is a price increase in

Each month the CPI is calculated by

In 2001,Pablo earned $200 per week at his job.In 2011,Pablo earned $240 per week.If the CPI in 2001 was 100 and the CPI in 2011 was 152,then

In 2012,the nominal wage rate for unionized carpenters was $37.50 and the CPI was 204.Calculate the real wage rate for this group of workers.

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 2010 is

In 2008,Cameron began his career with SBC.His starting salary was $32,000.By 2012,his salary increased to $35,000.If the CPI was 100.0 in 2008 and 107.5 in 2012,Cameron's 2012 real income is

Citicorp charges an 11 percent interest rate on all new car loans.If the inflation rate is 6 percent,Citicorp receives a real interest rate of

The CPI was 170 last year and is 190 this year.What is the inflation rate between these two years?

The CPI market basket

The reference base period that the BLS uses to measure the CPI is

If the base year CPI market basket costs $250 and next year the CPI market basket costs $275,what is next year's CPI?

The Consumer Expenditure Survey measures

If there is inflation and we compare the changes in a nominal variable over time versus its real counterpart,such as the nominal wage rate versus the real wage rate,we find that the

If the nominal wage is $30 in 2011 and the CPI is 202 in 2011,then the real wage in 1982-1984 dollars

Which of the following is a bias in the CPI? I.new goods bias Ii.index change bias Iii.commodity substitution bias

If the CPI this year is 240 and the CPI in the previous year was 200,what is the annual inflation rate?

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