Question 1

Iggie took a university teaching job as an assistant professor in 1980 at a salary of $15,000. By 2011, she had been promoted to full professor, with a salary of $70,000. If the price index was 82 in 1980 and 225 in 2011, then what is Iggie's 2011 salary in 1980 dollars?

Accepted Answer

A)   $25,511
B)   $52,073
C)   $40,140
D)   $41,159E) A) and B)
F) All of the above

Question 2

Table 24-5
The table below pertains to Wrexington, an economy in which the typical consumer's basket consists of 20 pounds of meat and 10 toys.
 
-Refer to Table 24-5. If the base year is 2004, then the CPI

Accepted Answer

A)   increased from 2004 to 2005 and increased from 2005 to 2006.
B)   increased from 2004 to 2005 and decreased from 2005 to 2006.
C)   decreased from 2004 to 2005 and increased from 2005 to 2006.
D)   decreased from 2004 to 2005 and decreased from 2005 to 2006.E) A) and C)
F) B) and C)

Question 3

When box office receipts are corrected for inflation, the most popular movie of all time is

Accepted Answer

A)   Star Wars.
B)   Titanic.
C)   Gone With the Wind.
D)   The Sound of Music.E) B) and C)
F) All of the above

Question 4

One of the widely acknowledged problems with using the consumer price index as a measure of the cost of living is that the CPI

Accepted Answer

A)   fails to measure all changes in the quality of goods.
B)   displays a housing bias.
C)   accounts for changes in prices of some goods, but prices of certain goods are assumed to remain constant.
D)   All of the above are correct.E) B) and C)
F) A) and B)

Question 5

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 2011, then the economy's inflation rate in 2011 was

Accepted Answer

A)   -5.0 percent.
B)   -3.3 percent.
C)   3.3 percent.
D)   16.0 percent.E) B) and C)
F) A) and D)

Question 6

A decrease in the price of domestically produced nuclear reactors will be reflected in

Accepted Answer

A)   both the GDP deflator and the consumer price index.
B)   neither the GDP deflator nor the consumer price index.
C)   the GDP deflator but not in the consumer price index.
D)   the consumer price index but not in the GDP deflator.E) A) and B)
F) All of the above

Question 7

The CPI was 96 in 1982, and the CPI was 230 in 2012. How much money would you have needed in 2012 in order to buy what you could have bought with $500 in 1982?

Accepted Answer

A)   $208.96
B)   $1,197.92
C)   $697.92
D)   $1,697.92E) C) and D)
F) A) and B)

Question 8

The CPI is more commonly used as a gauge of inflation than the GDP deflator is because

Accepted Answer

A)   the CPI is easier to measure.
B)   the CPI is calculated more often than the GDP deflator is.
C)   the CPI better reflects the goods and services bought by consumers.
D)   the GDP deflator cannot be used to gauge inflation.E) B) and C)
F) All of the above

Question 9

If the current year CPI is 140, then the price level has increased 40 percent since the base year.

Accepted Answer

A) True 
 B)False

Question 10

Table 24-2
The table below pertains to Pieway, an economy in which the typical consumer's basket consists of 15 bushels of peaches and 10 bushels of pecans.
 
-Refer to Table 24-2. If 2012 is the base year, then the CPI for 2013 was

Accepted Answer

A)   95.7.
B)   100.0.
C)   104.4.
D)   110.0.E) All of the above
F) A) and D)

Question 11

The goal of the consumer price index is to measure changes in the

Accepted Answer

A)   costs of production.
B)   cost of living.
C)   relative prices of consumer goods.
D)   production of consumer goods.E) B) and D)
F) B) and C)

Question 12

Table 24-1
The table below lists annual consumer price index and inflation rates for a country over the period 2005-2010. Assume the year 2005 is used as the base year.
 
-Refer to Table 24-1. What belongs in space C?

Accepted Answer

A)   120
B)   25%
C)   8.7%
D)   12%E) B) and C)
F) A) and C)

Question 13

David earned a salary of $43,500 in 1994 and $89,000 in 2010. The consumer price index was 148.2 in 1994 and 215.3 in 2010. David's 1994 salary in 2010 dollars is

Accepted Answer

A)   $43,849.05
B)   $61,263.43
C)   $63,195.34
D)   $93,655.50E) A) and B)
F) A) and C)

Question 14

Consumer price index =  × 100.

Accepted Answer

A) True 
 B)False

Question 15

By keeping the basket of goods and services the same when computing the CPI, the Bureau of Labor Statistics isolates the effects of price changes from the effect of any quantity changes that might be occurring at the same time.

Accepted Answer

A) True 
 B)False

Question 16

Table 24-7. The table below applies to an economy with only two goods - hamburgers and hot dogs. The fixed basket consists of 4 hamburgers and 8 hot dogs.
 
-Refer to Table 24-7. Which of the following scenarios is consistent with this statement? "The cost of living increased by 25 percent between 2009 and 2011."

Accepted Answer

A)   The price of a hot dog was $2.24 rather than $3.00 in 2009, with other prices in the table remaining fixed.
B)   The price of a hot dog was $4.07 rather than $3.63 in 2011, with other prices in the table remaining fixed..
C)   The price of a hamburger was $4.24 rather than $5.00 in 2009, with other prices in the table remaining fixed.
D)   The price of a hamburger was $5.96 rather than $5.61 in 2011, with other prices in the table remaining fixed.E) B) and C)
F) A) and B)

Question 17

Which of the following statements is correct about the relationship between the nominal interest rate and the real interest rate?

Accepted Answer

A)   The real interest rate is the nominal interest rate times the rate of inflation.
B)   The real interest rate is the nominal interest rate minus the rate of inflation.
C)   The real interest rate is the nominal interest rate plus the rate of inflation.
D)   The real interest rate is the nominal interest rate divided by the rate of inflation.E) A) and B)
F) C) and D)

Question 18

The inflation rate is calculated

Accepted Answer

A)   by determining the change in the price index from the preceding period.
B)   by adding up the price increases of all goods and services.
C)   by computing a simple average of the price increases for all goods and services.
D)   by determining the percentage increase in the price index from the preceding period.E) B) and C)
F) None of the above

Question 19

In the United States, nominal interest rates were

Accepted Answer

A)   high in the 1970s and 1990s.
B)   low in the 1970s and 1990s.
C)   high in the 1970s and low in the 1990s.
D)   low in the 1970s and high in the 1990s.E) None of the above
F) All of the above

Question 20

An increase in the price of bread produced domestically will be reflected in

Accepted Answer

A)   both the GDP deflator and the consumer price index.
B)   neither the GDP deflator nor the consumer price index.
C)   the GDP deflator but not in the consumer price index.
D)   the consumer price index but not in the GDP deflator.E) None of the above
F) B) and C)

Exam 16: Measuring the Cost of Living

By keeping the basket of goods and services the same when computing the CPI, the Bureau of Labor Statistics isolates the effects of price changes from the effect of any quantity changes that might be occurring at the same time.

Correct Answer
verified

One of the widely acknowledged problems with using the consumer price index as a measure of the cost of living is that the CPI

Correct Answer
verified

Correct Answer
verified

Table 24-2 The table below pertains to Pieway, an economy in which the typical consumer's basket consists of 15 bushels of peaches and 10 bushels of pecans. -Refer to Table 24-2. If 2012 is the base year, then the CPI for 2013 was

Correct Answer
verified

The CPI is more commonly used as a gauge of inflation than the GDP deflator is because

Correct Answer
verified

When box office receipts are corrected for inflation, the most popular movie of all time is

Correct Answer
verified

David earned a salary of $43,500 in 1994 and $89,000 in 2010. The consumer price index was 148.2 in 1994 and 215.3 in 2010. David's 1994 salary in 2010 dollars is

Correct Answer
verified

Which of the following statements is correct about the relationship between the nominal interest rate and the real interest rate?

Correct Answer
verified

A decrease in the price of domestically produced nuclear reactors will be reflected in

Correct Answer
verified

Table 24-1 The table below lists annual consumer price index and inflation rates for a country over the period 2005-2010. Assume the year 2005 is used as the base year. -Refer to Table 24-1. What belongs in space C?

Correct Answer
verified

The goal of the consumer price index is to measure changes in the

Correct Answer
verified

If the current year CPI is 140, then the price level has increased 40 percent since the base year.

Correct Answer
verified

The CPI was 96 in 1982, and the CPI was 230 in 2012. How much money would you have needed in 2012 in order to buy what you could have bought with $500 in 1982?

Correct Answer
verified

Consumer price index = × 100.

Correct Answer
verified

An increase in the price of bread produced domestically will be reflected in

Correct Answer
verified

Iggie took a university teaching job as an assistant professor in 1980 at a salary of $15,000. By 2011, she had been promoted to full professor, with a salary of $70,000. If the price index was 82 in 1980 and 225 in 2011, then what is Iggie's 2011 salary in 1980 dollars?

Correct Answer
verified

Table 24-5 The table below pertains to Wrexington, an economy in which the typical consumer's basket consists of 20 pounds of meat and 10 toys. -Refer to Table 24-5. If the base year is 2004, then the CPI

Correct Answer
verified

In the United States, nominal interest rates were

Correct Answer
verified

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 2011, then the economy's inflation rate in 2011 was

Correct Answer
verified

The inflation rate is calculated

Correct Answer
verified

Exam 16: Measuring the Cost of Living

By keeping the basket of goods and services the same when computing the CPI, the Bureau of Labor Statistics isolates the effects of price changes from the effect of any quantity changes that might be occurring at the same time.

Correct AnswerverifiedShow Answer

One of the widely acknowledged problems with using the consumer price index as a measure of the cost of living is that the CPI

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Table 24-2 The table below pertains to Pieway, an economy in which the typical consumer's basket consists of 15 bushels of peaches and 10 bushels of pecans. -Refer to Table 24-2. If 2012 is the base year, then the CPI for 2013 was

Correct AnswerverifiedShow Answer

The CPI is more commonly used as a gauge of inflation than the GDP deflator is because

Correct AnswerverifiedShow Answer

When box office receipts are corrected for inflation, the most popular movie of all time is

Correct AnswerverifiedShow Answer

David earned a salary of $43,500 in 1994 and $89,000 in 2010. The consumer price index was 148.2 in 1994 and 215.3 in 2010. David's 1994 salary in 2010 dollars is

Correct AnswerverifiedShow Answer

Which of the following statements is correct about the relationship between the nominal interest rate and the real interest rate?

Correct AnswerverifiedShow Answer

A decrease in the price of domestically produced nuclear reactors will be reflected in

Correct AnswerverifiedShow Answer

Table 24-1 The table below lists annual consumer price index and inflation rates for a country over the period 2005-2010. Assume the year 2005 is used as the base year. -Refer to Table 24-1. What belongs in space C?

Correct AnswerverifiedShow Answer

The goal of the consumer price index is to measure changes in the

Correct AnswerverifiedShow Answer

If the current year CPI is 140, then the price level has increased 40 percent since the base year.

Correct AnswerverifiedShow Answer

The CPI was 96 in 1982, and the CPI was 230 in 2012. How much money would you have needed in 2012 in order to buy what you could have bought with $500 in 1982?

Correct AnswerverifiedShow Answer

Consumer price index = × 100.

Correct AnswerverifiedShow Answer

An increase in the price of bread produced domestically will be reflected in

Correct AnswerverifiedShow Answer

Iggie took a university teaching job as an assistant professor in 1980 at a salary of $15,000. By 2011, she had been promoted to full professor, with a salary of $70,000. If the price index was 82 in 1980 and 225 in 2011, then what is Iggie's 2011 salary in 1980 dollars?

Correct AnswerverifiedShow Answer

Table 24-5 The table below pertains to Wrexington, an economy in which the typical consumer's basket consists of 20 pounds of meat and 10 toys. -Refer to Table 24-5. If the base year is 2004, then the CPI

Correct AnswerverifiedShow Answer

In the United States, nominal interest rates were

Correct AnswerverifiedShow Answer

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 2011, then the economy's inflation rate in 2011 was

Correct AnswerverifiedShow Answer

The inflation rate is calculated

Correct AnswerverifiedShow Answer

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