Question 1

Since 1300,the inflation rate has been greater than 2 percent per year and reaching its highest peaks

Accepted Answer

A)  primarily before 1400.
B)  primarily between 1400 and 1500.
C)  primarily between 1500 and 1700.
D)  primarily between 1700 and 1900.
E)  primarily after 1900.F) A) and E)
G) A) and D)

Question 2

To convert the nominal interest rate to the real interest rate,we

Accepted Answer

A)  divide the nominal interest rate by the inflation rate.
B)  multiply the nominal interest rate by the inflation rate.
C)  subtract the inflation rate from the nominal interest rate.
D)  add the inflation rate to the nominal interest rate.
E)  subtract the nominal interest rate from the inflation rate and then multiply by 100.F) A) and B)
G) B) and E)

Question 3

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 2012 is

Accepted Answer

A)  93.9.
B)  97.2.
C)  102.9.
D)  106.5.
E)  245.0.F) A) and E)
G) B) and E)

Question 4

Because the CPI overstates inflation,

Accepted Answer

A)  when wages are linked to the CPI,workers' wages become too low as time passes.
B)  as time passes,government payments are increasingly lower than intended.
C)  as time passes,government outlays are increased by more than necessary to compensate for inflation.
D)  workers do not receive adequate compensation for price changes.
E)  most contracts use the GDP deflator to measure inflation.F) All of the above
G) A) and C)

Question 5

-The information in the above table gives the 2000 base period market basket and prices used to construct the CPI for a small nation.The table also has 2010 prices.What is the value of the CPI for 2010?

Accepted Answer

A)  140
B)  133
C)  100
D)  71.4
E)  142F) None of the above
G) A) and D)

Question 6

Suppose that in 2012,real GDP is larger than nominal GDP.The GDP price index in 2012 is definitely

Accepted Answer

A)  negative.
B)  larger than the GDP price index in 2012.
C)  less than the GDP price index in 2012.
D)  greater than 100.
E)  less than 100.F) B) and E)
G) B) and C)

Question 7

Suppose that the CPI basket contains only 40 heads of cauliflower and 60 bunches of broccoli.If the price of cauliflower goes down by $1 per head and the price of broccoli goes up by $1 per bunch,then

Accepted Answer

A)  the CPI does not change.
B)  the CPI increases.
C)  the CPI decreases.
D)  the CPI might increase or decrease depending how the quantities are affected by the price changes.
E)  There is not enough information to answer this question.F) A) and B)
G) B) and E)

Question 8

The CPI market basket

Accepted Answer

A)  weights the goods and services according to the budget of an average urban household.
B)  determines the best possible way of taxing the average urban household.
C)  determines how the spending patterns of the average urban household change from month to month.
D)  determines how spending patterns change from urban household to urban household.
E)  changes from one month to the next in order to calculate the CPI.F) None of the above
G) C) and D)

Question 9

Your wage this year is $15 per hour and the CPI is 178.Next year you get a raise to $17 and the CPI rises to 185.What has happened?

Accepted Answer

A)  Your real wage has increased but by a smaller percentage than your nominal wage.
B)  Your nominal wage has increased but your real wage has declined.
C)  Your real wage rate has increased by a larger percentage than your nominal wage.
D)  Your real and nominal wages have each increased by the same percentage.
E)  Your nominal wage has increased but your real wage has not changed.F) B) and E)
G) A) and D)

Question 10

Constructing the CPI involves which of the following stages?
I.conducting the monthly price survey
Ii.converting the CPI to an international index
Iii.selecting CPI market basket

Accepted Answer

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

Question 11

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

Accepted Answer

A)  prices on average have increased 567 percent.
B)  prices on average have increased 244 percent.
C)  the price of the soda was greater in real value in 1970 than in 2007.
D)  the price of a soda has increased a greater percentage than the CPI.
E)  the real price of a soda is the same in 1970 and 2007.F) C) and D)
G) B) and E)

Question 12

In 1979,the price of gasoline was $1.389 per gallon and the CPI was 72.6.In 2003,the price of gasoline was $1.589 per gallon and the CPI was 182.9.Find the real price of gasoline in 1979 and 2003 in terms of base period dollars.

Accepted Answer

To adjust the price in 1979,the ratio of...

Question 13

-The table above gives the purchases of a typical consumer in a country comprised of one large city.These consumers purchase only restaurant meals and parking.The year 2010 is the reference base period.
a.Find the total cost of the CPI market basket for 2010 and 2011.
b.What is the CPI in 2010 and in 2011?
c.What is the inflation rate between 2010 and 2011?

Accepted Answer

a.The total cost of the CPI market baske...

Question 14

If the current period has a CPI of 143,then the amount of inflation since the base period is

Accepted Answer

A)  143 percent.
B)  43 percent.
C)  57 percent.
D)  157 percent.
E)  unknown without knowing the base period's CPI.F) A) and D)
G) A) and E)

Question 15

When the CPI rises ________,the inflation rate is ________.

Accepted Answer

A)  steadily;zero
B)  rapidly;high
C)  slowly;high
D)  rapidly;low
E)  rapidly;either high,low,or zero depending on whether production of output is increasing,decreasing,or not changing.F) A) and D)
G) None of the above

Question 16

According to the historical record of inflation since the 1300s,the inflation rate

Accepted Answer

A)  became highest in the twentieth century.
B)  was at its lowest after Columbus arrived to America.
C)  was at its highest during the Industrial Revolution.
D)  has always been consistently high.
E)  was higher in the 1300s than in the 1900s.F) A) and E)
G) C) and D)

Question 17

If your real income in base year prices is $50,000,then if the CPI is 170,what is your nominal income?

Accepted Answer

A)  $29,411.76
B)  $50,000.00
C)  $85,000.00
D)  $71,428.57
E)  $70,000.00F) All of the above
G) B) and D)

Question 18

Real GDP is $1,400 billion and nominal GDP is $1,800.The GDP price index equals

Accepted Answer

A)  100.0.
B)  77.0.
C)  128.6.
D)  2.86.
E)  222.2.F) C) and E)
G) D) and E)

Question 19

The real interest rate equals the

Accepted Answer

A)  nominal interest rate multiplied by 100.
B)  nominal interest rate divided by 100.
C)  nominal interest rate minus the inflation rate.
D)  inflation rate minus the nominal interest rate.
E)  nominal interest rate divided by the inflation rate and then multiplied by 100.F) A) and E)
G) A) and D)

Question 20

Define the nominal wage rate and the real wage rate.Can the nominal wage rate increase faster than the real wage rate?

Accepted Answer

The nominal wage rate is the wage rate m...

Exam 16: The Cpi and the Cost of Living

Real GDP is $1,400 billion and nominal GDP is $1,800.The GDP price index equals

Correct Answer
verified

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

Correct Answer
verified

Define the nominal wage rate and the real wage rate.Can the nominal wage rate increase faster than the real wage rate?

Correct Answer
verified
The nominal wage rate is the wage rate m...
View Answer

If the current period has a CPI of 143,then the amount of inflation since the base period is

Correct Answer
verified

Correct Answer
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a.The total cost of the CPI market baske...
View Answer

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 2012 is

Correct Answer
verified

Suppose that the CPI basket contains only 40 heads of cauliflower and 60 bunches of broccoli.If the price of cauliflower goes down by $1 per head and the price of broccoli goes up by $1 per bunch,then

Correct Answer
verified

The CPI market basket

Correct Answer
verified

Constructing the CPI involves which of the following stages? I.conducting the monthly price survey Ii.converting the CPI to an international index Iii.selecting CPI market basket

Correct Answer
verified

Your wage this year is $15 per hour and the CPI is 178.Next year you get a raise to $17 and the CPI rises to 185.What has happened?

Correct Answer
verified

-The information in the above table gives the 2000 base period market basket and prices used to construct the CPI for a small nation.The table also has 2010 prices.What is the value of the CPI for 2010?

Correct Answer
verified

Suppose that in 2012,real GDP is larger than nominal GDP.The GDP price index in 2012 is definitely

Correct Answer
verified

The real interest rate equals the

Correct Answer
verified

To convert the nominal interest rate to the real interest rate,we

Correct Answer
verified

When the CPI rises ,the inflation rate is .

Correct Answer
verified

In 1979,the price of gasoline was $1.389 per gallon and the CPI was 72.6.In 2003,the price of gasoline was $1.589 per gallon and the CPI was 182.9.Find the real price of gasoline in 1979 and 2003 in terms of base period dollars.

Correct Answer
verified
To adjust the price in 1979,the ratio of...
View Answer

Because the CPI overstates inflation,

Correct Answer
verified

According to the historical record of inflation since the 1300s,the inflation rate

Correct Answer
verified

Since 1300,the inflation rate has been greater than 2 percent per year and reaching its highest peaks

Correct Answer
verified

If your real income in base year prices is $50,000,then if the CPI is 170,what is your nominal income?

Correct Answer
verified

Exam 16: The Cpi and the Cost of Living

Real GDP is $1,400 billion and nominal GDP is $1,800.The GDP price index equals

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Define the nominal wage rate and the real wage rate.Can the nominal wage rate increase faster than the real wage rate?

Correct AnswerverifiedThe nominal wage rate is the wage rate m...View AnswerShow Answer

If the current period has a CPI of 143,then the amount of inflation since the base period is

Correct AnswerverifiedShow Answer

Correct Answerverifieda.The total cost of the CPI market baske...View AnswerShow Answer

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 2012 is

Correct AnswerverifiedShow Answer

Suppose that the CPI basket contains only 40 heads of cauliflower and 60 bunches of broccoli.If the price of cauliflower goes down by $1 per head and the price of broccoli goes up by $1 per bunch,then

Correct AnswerverifiedShow Answer

The CPI market basket

Correct AnswerverifiedShow Answer

Constructing the CPI involves which of the following stages? I.conducting the monthly price survey Ii.converting the CPI to an international index Iii.selecting CPI market basket

Correct AnswerverifiedShow Answer

Your wage this year is $15 per hour and the CPI is 178.Next year you get a raise to $17 and the CPI rises to 185.What has happened?

Correct AnswerverifiedShow Answer

-The information in the above table gives the 2000 base period market basket and prices used to construct the CPI for a small nation.The table also has 2010 prices.What is the value of the CPI for 2010?

Correct AnswerverifiedShow Answer

Suppose that in 2012,real GDP is larger than nominal GDP.The GDP price index in 2012 is definitely

Correct AnswerverifiedShow Answer

The real interest rate equals the

Correct AnswerverifiedShow Answer

To convert the nominal interest rate to the real interest rate,we

Correct AnswerverifiedShow Answer

When the CPI rises ________,the inflation rate is ________.

Correct AnswerverifiedShow Answer

In 1979,the price of gasoline was $1.389 per gallon and the CPI was 72.6.In 2003,the price of gasoline was $1.589 per gallon and the CPI was 182.9.Find the real price of gasoline in 1979 and 2003 in terms of base period dollars.

Correct AnswerverifiedTo adjust the price in 1979,the ratio of...View AnswerShow Answer

Because the CPI overstates inflation,

Correct AnswerverifiedShow Answer

According to the historical record of inflation since the 1300s,the inflation rate

Correct AnswerverifiedShow Answer

Since 1300,the inflation rate has been greater than 2 percent per year and reaching its highest peaks

Correct AnswerverifiedShow Answer

If your real income in base year prices is $50,000,then if the CPI is 170,what is your nominal income?

Correct AnswerverifiedShow Answer

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Correct Answer
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The nominal wage rate is the wage rate m...
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a.The total cost of the CPI market baske...
View Answer

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Correct Answer
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When the CPI rises ,the inflation rate is .

Correct Answer
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To adjust the price in 1979,the ratio of...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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