Question 1

When a new good is introduced, consumers have more variety from which to choose, and this in turn increases the cost of maintaining the same level of economic well-being.

Accepted Answer

A) True 
 B)False

Question 2

In 1979 and 1980,

Accepted Answer

A) the U.S. inflation rate as measured by the GDP deflator was higher than that measured by the CPI, and the difference was explained by rapidly rising prices of goods exported by the U.S. 
B) the U.S. inflation rate as measured by the CPI was higher than that measured by the GDP deflator, and the difference was explained by rapidly rising prices of goods exported by the U.S. 
C) the U.S. inflation rate as measured by the GDP deflator was higher than that measured by the CPI, and the difference was explained by rapidly rising oil prices. 
D) the U.S. inflation rate as measured by the CPI was higher than that measured by the GDP deflator, and the difference was explained by rapidly rising oil prices.

Question 3

Table 24-12. Will's expenditures on food for three consecutive years, along with other values, are presented in the table below. 
-Refer to Table 24-12. Suppose Will's 2010 food expenditures in 2011 dollars amount to $6,235. Then x, the consumer price index for 2011, has a value of

Accepted Answer

A) 171.2. 
B) 175.0. 
C) 177.5. 
D) 180.6.

Question 4

Table 24-15
​
The following table shows the prices of good X and good Y for 2013-2015. In addition, assume the basket of goods used to compute the Consumer Price Index consists of 3 units of good X and 4 units of good Y.
​  ​
-Refer to Table 24-15. The inflation rate in 2015 was approximately

Accepted Answer

A) ​41%. 
B) ​70%. 
C) ​140%. 
D) ​240%.

Question 5

Table 24-3
The table below pertains to Iowan, an economy in which the typical consumer's basket consists of 4 pounds of pork and 3 bushels of corn. 
-Refer to Table 24-3. If 2013 is the base year, then the inflation rate in 2013 was

Accepted Answer

A) 24.7 percent. 
B) 54.0 percent. 
C) 32.8 percent. 
D) 38.0 percent.

Question 6

Table 24-6
The table below pertains to Napandsnack, an economy in which the typical consumer's basket consists of 2 pillows and 15 hotdogs. 
-Refer to Table 24-6. If the base year is 2009, then the economy's inflation rate in 2010 is

Accepted Answer

A) 20 percent. 
B) 25 percent. 
C) 30 percent. 
D) 120 percent.

Question 7

Which of the following statements about real and nominal interest rates is correct?

Accepted Answer

A) When the nominal interest rate is rising, the real interest rate is necessarily rising; when the nominal interest rate is falling, the real interest rate is necessarily falling. 
B) If the nominal interest rate is 4 percent and the inflation rate is 3 percent, then the real interest rate is 7 percent. 
C) An increase in the real interest rate is necessarily accompanied by either an increase in the nominal interest rate, an increase in the inflation rate, or both. 
D) When the inflation rate is positive, the nominal interest rate is necessarily greater than the real interest rate.

Question 8

Scenario 24-5
TOPICS:
Price levels
Inflation
KEYWORDS:
BLOOM'S: Application
CUSTOM ID:
012.24 - SAE - MANK08
Scenario 24-6
A small economy produced and consumed goods X and Y in 2010 and 2011 in the amounts shown in the table below. Assume that the market basket for the CPI is defined in the base year. 
-Refer to Scenario 24-6. Using 2011 as the base year, what is the inflation rate in 2011?

Accepted Answer

The answer of Scenario 24-5
TOPICS:
Price levels
Inflation
KEYWORDS:
BLOOM'S: Application
CUSTOM ID:
012.24 - SAE...

Question 9

When some dollar amount is automatically corrected for inflation by law or contract, the amount is said to be indexed for inflation.

Accepted Answer

A) True 
 B)False

Question 10

Because the consumer price index reflects the goods and services bought by consumers better than the GDP deflator does, it is the more common gauge of inflation.

Accepted Answer

A) True 
 B)False

Question 11

One advantage of using the CPI over the GDP Deflator is that the CPI updates the basket of goods used to compute the index each month whereas the GDP Deflator maintains the same basket of goods for long periods of time.​

Accepted Answer

A) True 
 B)False

Question 12

The consumer price index was 200 in 2012 and 208 in 2013. The nominal interest rate during this period was 9 percent. What was the real interest rate during this period?

Accepted Answer

A) 5.00 percent 
B) 1.00 percent 
C) 5.15 percent 
D) 13.00 percent

Question 13

The U.S. economy has never experienced deflation.

Accepted Answer

A) True 
 B)False

Question 14

Babe Ruth's 1931 salary was $80,000. Government statistics show a consumer price index of 15.2 for 1931 and 237 for 2015. Ruth's 1931 salary was equivalent to a 2015 salary of about

Accepted Answer

A) $5,296. 
B) $1,128,421 
C) $1,247,368 
D) $17,152,000

Question 15

Which of the following is not a widely acknowledged problem with using the CPI as a measure of the cost of living?

Accepted Answer

A) substitution bias 
B) introduction of new goods 
C) unmeasured quality change 
D) unmeasured price change

Question 16

Table 24-12. Will's expenditures on food for three consecutive years, along with other values, are presented in the table below. 
-Refer to Table 24-12. If the nominal interest rate was 8 percent in 2010, then

Accepted Answer

A) the real interest rate in 2010 was 3 percent. 
B) the real interest rate in 2010 was 4 percent. 
C) Will's 2009 food expenditures in 2010 dollars amount to $5,800. 
D) Will's 2009 food expenditures in 2011 dollars amount to $6,200.

Question 17

​Table 24-14
​
The following table shows some values of the Consumer Price Index and the corresponding inflation rates for 2012-2015.
​ 
-Refer to Table 24-14. The value of the Consumer Price Index in 2011 was approximately

Accepted Answer

A) ​224.9. 
B) ​226.9. 
C) ​227.5. 
D) ​228.4.

Question 18

Which of the following is correct?

Accepted Answer

A) Nominal and real interest rates always move together. 
B) Nominal and real interest rates never move together. 
C) Nominal and real interest rates do not always move together. 
D) Nominal and real interest rates always move in opposite directions.

Question 19

If the consumer price index was 100 in the base year and 106 in the following year, then the inflation rate was

Accepted Answer

A) 1.06 percent. 
B) 6 percent. 
C) 10.6 percent. 
D) 106 percent.

Question 20

If the real interest rate is 6.8% and the inflation rate is 3.9%, what is the nominal interest rate?

Accepted Answer

The answer of If the real interest rate is 6.8%...

Exam 24: Measuring the Cost of Living

When a new good is introduced, consumers have more variety from which to choose, and this in turn increases the cost of maintaining the same level of economic well-being.

In 1979 and 1980,

Table 24-12. Will's expenditures on food for three consecutive years, along with other values, are presented in the table below. -Refer to Table 24-12. Suppose Will's 2010 food expenditures in 2011 dollars amount to $6,235. Then x, the consumer price index for 2011, has a value of

Table 24-15 The following table shows the prices of good X and good Y for 2013-2015. In addition, assume the basket of goods used to compute the Consumer Price Index consists of 3 units of good X and 4 units of good Y. -Refer to Table 24-15. The inflation rate in 2015 was approximately

Table 24-3 The table below pertains to Iowan, an economy in which the typical consumer's basket consists of 4 pounds of pork and 3 bushels of corn. -Refer to Table 24-3. If 2013 is the base year, then the inflation rate in 2013 was

Table 24-6 The table below pertains to Napandsnack, an economy in which the typical consumer's basket consists of 2 pillows and 15 hotdogs. -Refer to Table 24-6. If the base year is 2009, then the economy's inflation rate in 2010 is

Which of the following statements about real and nominal interest rates is correct?

When some dollar amount is automatically corrected for inflation by law or contract, the amount is said to be indexed for inflation.

Because the consumer price index reflects the goods and services bought by consumers better than the GDP deflator does, it is the more common gauge of inflation.

One advantage of using the CPI over the GDP Deflator is that the CPI updates the basket of goods used to compute the index each month whereas the GDP Deflator maintains the same basket of goods for long periods of time.

The consumer price index was 200 in 2012 and 208 in 2013. The nominal interest rate during this period was 9 percent. What was the real interest rate during this period?

The U.S. economy has never experienced deflation.

Babe Ruth's 1931 salary was $80,000. Government statistics show a consumer price index of 15.2 for 1931 and 237 for 2015. Ruth's 1931 salary was equivalent to a 2015 salary of about

Which of the following is not a widely acknowledged problem with using the CPI as a measure of the cost of living?

Table 24-12. Will's expenditures on food for three consecutive years, along with other values, are presented in the table below. -Refer to Table 24-12. If the nominal interest rate was 8 percent in 2010, then

Table 24-14 The following table shows some values of the Consumer Price Index and the corresponding inflation rates for 2012-2015. -Refer to Table 24-14. The value of the Consumer Price Index in 2011 was approximately

Which of the following is correct?

If the consumer price index was 100 in the base year and 106 in the following year, then the inflation rate was

If the real interest rate is 6.8% and the inflation rate is 3.9%, what is the nominal interest rate?

Exam 24: Measuring the Cost of Living

When a new good is introduced, consumers have more variety from which to choose, and this in turn increases the cost of maintaining the same level of economic well-being.

In 1979 and 1980,

Table 24-12. Will's expenditures on food for three consecutive years, along with other values, are presented in the table below. -Refer to Table 24-12. Suppose Will's 2010 food expenditures in 2011 dollars amount to $6,235. Then x, the consumer price index for 2011, has a value of

Table 24-15 ​ The following table shows the prices of good X and good Y for 2013-2015. In addition, assume the basket of goods used to compute the Consumer Price Index consists of 3 units of good X and 4 units of good Y. ​ ​ -Refer to Table 24-15. The inflation rate in 2015 was approximately

Table 24-3 The table below pertains to Iowan, an economy in which the typical consumer's basket consists of 4 pounds of pork and 3 bushels of corn. -Refer to Table 24-3. If 2013 is the base year, then the inflation rate in 2013 was

Table 24-6 The table below pertains to Napandsnack, an economy in which the typical consumer's basket consists of 2 pillows and 15 hotdogs. -Refer to Table 24-6. If the base year is 2009, then the economy's inflation rate in 2010 is

Which of the following statements about real and nominal interest rates is correct?

When some dollar amount is automatically corrected for inflation by law or contract, the amount is said to be indexed for inflation.

Because the consumer price index reflects the goods and services bought by consumers better than the GDP deflator does, it is the more common gauge of inflation.

One advantage of using the CPI over the GDP Deflator is that the CPI updates the basket of goods used to compute the index each month whereas the GDP Deflator maintains the same basket of goods for long periods of time.​

The consumer price index was 200 in 2012 and 208 in 2013. The nominal interest rate during this period was 9 percent. What was the real interest rate during this period?

The U.S. economy has never experienced deflation.

Babe Ruth's 1931 salary was $80,000. Government statistics show a consumer price index of 15.2 for 1931 and 237 for 2015. Ruth's 1931 salary was equivalent to a 2015 salary of about

Which of the following is not a widely acknowledged problem with using the CPI as a measure of the cost of living?

Table 24-12. Will's expenditures on food for three consecutive years, along with other values, are presented in the table below. -Refer to Table 24-12. If the nominal interest rate was 8 percent in 2010, then

​Table 24-14 ​ The following table shows some values of the Consumer Price Index and the corresponding inflation rates for 2012-2015. ​ -Refer to Table 24-14. The value of the Consumer Price Index in 2011 was approximately

Which of the following is correct?

If the consumer price index was 100 in the base year and 106 in the following year, then the inflation rate was

If the real interest rate is 6.8% and the inflation rate is 3.9%, what is the nominal interest rate?

Table 24-15 The following table shows the prices of good X and good Y for 2013-2015. In addition, assume the basket of goods used to compute the Consumer Price Index consists of 3 units of good X and 4 units of good Y. -Refer to Table 24-15. The inflation rate in 2015 was approximately

One advantage of using the CPI over the GDP Deflator is that the CPI updates the basket of goods used to compute the index each month whereas the GDP Deflator maintains the same basket of goods for long periods of time.

Table 24-14 The following table shows some values of the Consumer Price Index and the corresponding inflation rates for 2012-2015. -Refer to Table 24-14. The value of the Consumer Price Index in 2011 was approximately