Question 1

When the price of Italian wine rises, this change is reflected in the U.S. CPI but not in the U.S. GDP deflator.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is the correct formula for calculating the inflation rate?

Accepted Answer

A)   
B)   
C)   
D)   E) All of the above
F) A) and B)

Question 3

Suppose the consumer price index was 184 in 2009 and 198.17 in 2010. The nominal interest rate during this period was 5.8 percent. What was the real interest rate during this period?

Accepted Answer

A)   0.4 percent
B)   1.2 percent
C)   -1.9 percent
D)   -2.6 percentE) A) and C)
F) None of the above

Question 4

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 2012 is the base year, then the CPI for 2013 was

Accepted Answer

A)   100.0.
B)   116.0.
C)   132.8.
D)   154.0.E) None of the above
F) A) and B)

Question 5

In the basket of goods that is used to compute the consumer price index, which of the following categories of consumer spending is the largest?

Accepted Answer

A)   education & communication
B)   recreation
C)   medical care
D)   All of the above categories are about equal in magnitude.E) None of the above
F) A) and C)

Question 6

Scenario 24-5
Suppose the residents of Mediaville spend all of their income on books, CDs, and DVDs. In 2009, they buy 400 books for $3,200, 200 CDs for $1,400, and 100 DVDs for $900. In 2010, they buy 360 books for $3,240, 250 CDs for $1,500, and 125 DVDs for $1,250. Assume that the market basket for the CPI is defined in the base year.
-Refer to Scenario 24-5. Using 2009 as the base year, what is the CPI in each year?

Accepted Answer

In 2009 the CPI is 1...

Question 7

The goal of the consumer price index is to gauge how much incomes must rise to maintain a constant standard of living.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following agencies calculates the CPI?

Accepted Answer

A)   Bureau of Labor Statistics
B)   Congressional Budget Office
C)   Federal Reserve
D)   Bureau of National Price Standards and RecordsE) A) and B)
F) B) and C)

Question 9

Changes in the quality of a good

Accepted Answer

A)   do not present a problem in the construction of the consumer price index.
B)   present a problem in the construction of the consumer price index, and that problem is sometimes referred to as substitution bias.
C)   are not accounted for, as a matter of policy, by the Bureau of Labor Statistics.
D)   can lead to either an increase or a decrease in the value of a dollar.E) A) and B)
F) B) and C)

Question 10

Many economists believe the bias in the CPI is now only about half as large as it once was.

Accepted Answer

A) True 
 B)False

Question 11

In comparison to the situation in the late 1970s, the United States experienced lower nominal interest rates and higher real interest rates in the late 1990s.

Accepted Answer

A) True 
 B)False

Question 12

Scenario 24-1
The price tag on a tennis ball in 1975 read $0.10, and the price tag on a tennis ball in 2005 read $1.00. The CPI in 1975 was 52.3, and the CPI in 2005 was 191.3.
-Refer to Scenario 24-1. In 1975 dollars, a 1975 tennis ball cost $0.10 and a 2005 tennis ball cost

Accepted Answer

A)   $0.27, so tennis balls were cheaper in 1975.
B)   $0.27, so tennis balls were cheaper in 2005.
C)   $3.66, so tennis balls were cheaper in 1975.
D)   $3.66, so tennis balls were cheaper in 2005.E) None of the above
F) All of the above

Question 13

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 2010, then the consumer price index was

Accepted Answer

A)   83.33 in 2009, 100.00 in 2010, and 96.67 in 2011.
B)   85.56 in 2009, 100.00 in 2010, and 102.22 in 2011.
C)   85.56 in 2009, 100.00 in 2010, and 96.67 in 2011.
D)   92.22 in 2009, 99.00 in 2010, and 95.22 in 2011.E) All of the above
F) B) and C)

Question 14

Table 24-11. Megan's salary for three consecutive years, along with other values, are presented in the table below.
 
-Refer to Table 24-11. Suppose the consumer price index for 2013 is not necessarily 235. If the nominal interest rate for 2013 is 7.3 percent , then the consumer price index for 2013 is, in fact,

Accepted Answer

A)   239.1.
B)   235.5.
C)   242.7.
D)   250.9.E) B) and C)
F) B) and D)

Question 15

In 1954, Mickey Mantle earned $21,000 playing for the New York Yankees. The CPI in 1954 was 26.9, and the CPI in 2010 was 218.06. What is Mickey Mantle's 1954 salary in 2010 dollars?

Accepted Answer

Mickey Mantle's 1954...

Question 16

If the price of Italian shoes imported into the United States increases, then

Accepted Answer

A)   both the GDP deflator and the consumer price index will increase.
B)   neither the GDP deflator nor the consumer price index will increase.
C)   the GDP deflator will increase, but the consumer price index will not increase.
D)   the consumer price index will increase, but the GDP deflator will not increase.E) B) and C)
F) A) and B)

Question 17

One of the differences between the GDP deflator and the consumer price index is

Accepted Answer

A)   the GDP deflator includes income earned by American citizens working in foreign countries and the consumer price index is based solely on purchases made in the U.S.
B)   the consumer price index basket of goods is updated constantly by the Bureau of Labor Statistics whereas the GDP deflator is updated only occasionally.
C)   the consumer price index includes items not included in the GDP deflator such as airplanes purchased by the Air Force.
D)   the GDP deflator reflects prices for all goods and services produced domestically and the consumer price index reflects prices for some goods and services bought by consumers.E) A) and B)
F) None of the above

Question 18

Explain how the prices of goods and services used in the CPI differ from the prices used in the PPI.

Accepted Answer

The CPI focuses on goods and s...

Question 19

Table 24-10
The table below shows the prices of baseballs and baseball bats for three years. Assume the typical consumer's basket consists of 6 baseballs and 2 baseball bats.
 
-Refer to Table 24-10. If 2009 is the base year, then the consumer price index was

Accepted Answer

A)   83.00 in 2008, 100.00 in 2009, and 132.50 in 2010.
B)   89.97 in 2008, 100.00 in 2009, and 117.43 in 2010.
C)   90.88 in 2008, 100.00 in 2009, and 117.43 in 2010.
D)   169.50 in 2008, 186.50 in 2009, and 219.00 in 2010.E) B) and C)
F) A) and D)

Question 20

Table 24-4
The table below pertains to Studious, an economy in which the typical consumer's basket consists of 5 books and 10 calculators.
 
-Refer to Table 24-4. The cost of the basket in 2012 was

Accepted Answer

A)   $32.
B)   $200.
C)   $210.
D)   $247.5.E) A) and B)
F) B) and C)

Exam 16: Measuring the Cost of Living

Table 24-4 The table below pertains to Studious, an economy in which the typical consumer's basket consists of 5 books and 10 calculators. -Refer to Table 24-4. The cost of the basket in 2012 was

Correct Answer
verified

If the price of Italian shoes imported into the United States increases, then

Correct Answer
verified

Explain how the prices of goods and services used in the CPI differ from the prices used in the PPI.

Correct Answer
verified
The CPI focuses on goods and s...
View Answer

In comparison to the situation in the late 1970s, the United States experienced lower nominal interest rates and higher real interest rates in the late 1990s.

Correct Answer
verified

Which of the following agencies calculates the CPI?

Correct Answer
verified

Scenario 24-1 The price tag on a tennis ball in 1975 read $0.10, and the price tag on a tennis ball in 2005 read $1.00. The CPI in 1975 was 52.3, and the CPI in 2005 was 191.3. -Refer to Scenario 24-1. In 1975 dollars, a 1975 tennis ball cost $0.10 and a 2005 tennis ball cost

Correct Answer
verified

In the basket of goods that is used to compute the consumer price index, which of the following categories of consumer spending is the largest?

Correct Answer
verified

Suppose the consumer price index was 184 in 2009 and 198.17 in 2010. The nominal interest rate during this period was 5.8 percent. What was the real interest rate during this period?

Correct Answer
verified

Many economists believe the bias in the CPI is now only about half as large as it once was.

Correct Answer
verified

The goal of the consumer price index is to gauge how much incomes must rise to maintain a constant standard of living.

Correct Answer
verified

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 2012 is the base year, then the CPI for 2013 was

Correct Answer
verified

Table 24-10 The table below shows the prices of baseballs and baseball bats for three years. Assume the typical consumer's basket consists of 6 baseballs and 2 baseball bats. -Refer to Table 24-10. If 2009 is the base year, then the consumer price index was

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 2010, then the consumer price index was

Correct Answer
verified

Changes in the quality of a good

Correct Answer
verified

In 1954, Mickey Mantle earned $21,000 playing for the New York Yankees. The CPI in 1954 was 26.9, and the CPI in 2010 was 218.06. What is Mickey Mantle's 1954 salary in 2010 dollars?

Correct Answer
verified
Mickey Mantle's 1954...
View Answer

Correct Answer
verified

Which of the following is the correct formula for calculating the inflation rate?

Correct Answer
verified

When the price of Italian wine rises, this change is reflected in the U.S. CPI but not in the U.S. GDP deflator.

Correct Answer
verified

Correct Answer
verified
In 2009 the CPI is 1...
View Answer

One of the differences between the GDP deflator and the consumer price index is

Correct Answer
verified

Exam 16: Measuring the Cost of Living

Table 24-4 The table below pertains to Studious, an economy in which the typical consumer's basket consists of 5 books and 10 calculators. -Refer to Table 24-4. The cost of the basket in 2012 was

Correct AnswerverifiedShow Answer

If the price of Italian shoes imported into the United States increases, then

Correct AnswerverifiedShow Answer

Explain how the prices of goods and services used in the CPI differ from the prices used in the PPI.

Correct AnswerverifiedThe CPI focuses on goods and s...View AnswerShow Answer

In comparison to the situation in the late 1970s, the United States experienced lower nominal interest rates and higher real interest rates in the late 1990s.

Correct AnswerverifiedShow Answer

Which of the following agencies calculates the CPI?

Correct AnswerverifiedShow Answer

Scenario 24-1 The price tag on a tennis ball in 1975 read $0.10, and the price tag on a tennis ball in 2005 read $1.00. The CPI in 1975 was 52.3, and the CPI in 2005 was 191.3. -Refer to Scenario 24-1. In 1975 dollars, a 1975 tennis ball cost $0.10 and a 2005 tennis ball cost

Correct AnswerverifiedShow Answer

In the basket of goods that is used to compute the consumer price index, which of the following categories of consumer spending is the largest?

Correct AnswerverifiedShow Answer

Suppose the consumer price index was 184 in 2009 and 198.17 in 2010. The nominal interest rate during this period was 5.8 percent. What was the real interest rate during this period?

Correct AnswerverifiedShow Answer

Many economists believe the bias in the CPI is now only about half as large as it once was.

Correct AnswerverifiedShow Answer

The goal of the consumer price index is to gauge how much incomes must rise to maintain a constant standard of living.

Correct AnswerverifiedShow Answer

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 2012 is the base year, then the CPI for 2013 was

Correct AnswerverifiedShow Answer

Table 24-10 The table below shows the prices of baseballs and baseball bats for three years. Assume the typical consumer's basket consists of 6 baseballs and 2 baseball bats. -Refer to Table 24-10. If 2009 is the base year, then the consumer price index was

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 2010, then the consumer price index was

Correct AnswerverifiedShow Answer

Changes in the quality of a good

Correct AnswerverifiedShow Answer

In 1954, Mickey Mantle earned $21,000 playing for the New York Yankees. The CPI in 1954 was 26.9, and the CPI in 2010 was 218.06. What is Mickey Mantle's 1954 salary in 2010 dollars?

Correct AnswerverifiedMickey Mantle's 1954...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Which of the following is the correct formula for calculating the inflation rate?

Correct AnswerverifiedShow Answer

When the price of Italian wine rises, this change is reflected in the U.S. CPI but not in the U.S. GDP deflator.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedIn 2009 the CPI is 1...View AnswerShow Answer

One of the differences between the GDP deflator and the consumer price index is

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
verified
The CPI focuses on goods and s...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Mickey Mantle's 1954...
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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In 2009 the CPI is 1...
View Answer

Correct Answer
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