Question 1

An increase in the price of dairy products 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.

Question 2

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.

Question 3

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 rate of inflation was 23.75 percent for 2011."

Accepted Answer

A)   The price of a hot dog was $2.44 rather than $3.30 in 2010, with other prices in the table remaining fixed.
B)   The price of a hot dog was $4.22 rather than $3.63 in 2011, with other prices in the table remaining fixed..
C)   The price of a hamburger was $3.80 rather than $5.50 in 2010, with other prices in the table remaining fixed.
D)   The price of a hamburger was $6.60 rather than $5.61 in 2011, with other prices in the table remaining fixed.

Question 4

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. The cost of the basket in 2006 was

Accepted Answer

A)   $9.
B)   $130.
C)   $140.
D)   $270.

Question 5

If the nominal interest rate is 5 percent, and the rate of inflation is 3 percent, then the real interest rate is equal to

Accepted Answer

A)   2 percent.
B)   0.6 percent.
C)   1.7 percent.
D)   15 percent.

Question 6

When the quality of a good improves while its price remains the same, the purchasing power of the dollar

Accepted Answer

A)   increases, so the CPI overstates the change in the cost of living if the quality change is not accounted for.
B)   increases, so the CPI understates the change in the cost of living if the quality change is not accounted for.
C)   decreases, so the CPI overstates the change in the cost of living if the quality change is not accounted for.
D)   decreases, so the CPI understates the change in the cost of living if the quality change is not accounted for.

Question 7

Price changes from year to year are not proportional, and consumers respond to these changes by altering their spending patterns. The problem this creates for inflation calculations is called

Accepted Answer

A)   deflation.
B)   inflation.
C)   unmeasured quality change.
D)   substitution bias.

Question 8

Which of the following statements is correct?

Accepted Answer

A)   The CPI can be used to compare dollar figures from different points in time.
B)   The percentage change in the CPI is a measure of the inflation rate, but the percentage change in the GDP deflator is not a measure of the inflation rate.
C)   Compared to the consumer price index (CPI) , the GDP deflator is the more common gauge of inflation.
D)   The GDP deflator better reflects the goods and services bought by consumers than does the CPI.

Question 9

The consumer price index tires to measure how much consumer incomes must rise in order to maintain a constant

Accepted Answer

A)   level of real GDP.
B)   ratio of consumption to GDP.
C)   ratio of net exports to GDP.
D)   standard of living.

Exam 24: Measuring the Cost of Living

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. The cost of the basket in 2006 was

Correct Answer
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An increase in the price of dairy products produced domestically will be reflected in

Correct Answer
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Which of the following statements is correct?

Correct Answer
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Price changes from year to year are not proportional, and consumers respond to these changes by altering their spending patterns. The problem this creates for inflation calculations is called

Correct Answer
verified

If the nominal interest rate is 5 percent, and the rate of inflation is 3 percent, then the real interest rate is equal to

Correct Answer
verified

The consumer price index tires to measure how much consumer incomes must rise in order to maintain a constant

Correct Answer
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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 rate of inflation was 23.75 percent for 2011."

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

Correct Answer
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When the quality of a good improves while its price remains the same, the purchasing power of the dollar

Correct Answer
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Exam 24: Measuring the Cost of Living

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. The cost of the basket in 2006 was

Correct AnswerverifiedShow Answer

An increase in the price of dairy products produced domestically will be reflected in

Correct AnswerverifiedShow Answer

Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Price changes from year to year are not proportional, and consumers respond to these changes by altering their spending patterns. The problem this creates for inflation calculations is called

Correct AnswerverifiedShow Answer

If the nominal interest rate is 5 percent, and the rate of inflation is 3 percent, then the real interest rate is equal to

Correct AnswerverifiedShow Answer

The consumer price index tires to measure how much consumer incomes must rise in order to maintain a constant

Correct AnswerverifiedShow Answer

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 rate of inflation was 23.75 percent for 2011."

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

When the quality of a good improves while its price remains the same, the purchasing power of the dollar

Correct AnswerverifiedShow Answer

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