FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 11: Measuring the Cost of Living

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 51

Multiple Choice

Review LaterAdd Note

Review Later

If the CPI was 110 this year and 100 last year, then

A) the cost of the CPI basket of goods and services increased by 10 percent this year.
B) the price level increased by 110 percent this year.
C) the inflation rate for this year was 10 percent higher than the inflation rate for last year.
D) All of the above are correct.

E) A) and B)
F) A) and C)

Correct Answer

verified

Show Answer

Question 52

Multiple Choice

Review LaterAdd Note

Review Later

The price of DVD players increases dramatically, causing a 1 percent increase in the CPI. The price increase will most likely cause the GDP deflator to increase by

A) more than 1 percent.
B) less than 1 percent.
C) 1 percent.
D) None of the above is correct; this particular price increase will not affect the GDP deflator.

E) B) and C)
F) C) and D)

Correct Answer

verified

Show Answer

Question 53

Multiple Choice

Review LaterAdd Note

During a certain year, the consumer price index increased from 150 to 159 and the purchasing power of a person's bank account increased by 3.5 percent. For that year,

Table 11-4 The table below pertains to Wrexington, an economy in which the typical consumer's basket consists of 20 pounds of meat and 10 toys. $\begin{array} { | c | c | c } \text { Year } & \begin{array} { c } \text { Price of } \\\text { Meat }\end{array} & \begin{array} { c } \text { Price of a } \\\text { Tryy }\end{array} \\\hline 2004 & \$ 3 \text { per pound } & \$ 2 \\\hline 2005 & \$ 1 \text { per pound } & \$ 7 \\\hline 2006 & \$ 4 \text { per pound } & \$ 5 \\\hline\end{array}$ -Refer to Table 11-4. The inflation rate was

The CPI is a measure of the overall cost of the goods and services bought by a typical consumer.

Consternation Corporation has an agreement with its workers to index completely the wage of its employees using the CPI. Consternation Corporation currently pays its production line workers $7.50 an hour and is scheduled to index their wages today. If the CPI is currently 130 and was 125 a year ago, the firm should increase the hourly wages of its workers by

Kristine has a savings account at a bank. If the nominal interest rate she earns exceeds the rate of inflation, then her purchasing power increases over time.

Corey deposits $1,000 in a savings account that pays an annual interest rate of 5 percent. Over the course of a year, the inflation rate is 1.7 percent. At the end of the year, Corey has

Which of the following is the most accurate statement about the effects of quality change on the CPI?

Scenario 11-1 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 11-1. The price of a 1975 tennis ball in 2005 dollars is

Table 11-3 The table below pertains to Studious, an economy in which the typical consumer's basket consists of 5 books and 10 calculators. $\begin{array} { | c | c | c | } \hline \text { Year } & \begin{array} { c } \text { Price of a } \\\text { Buak }\end{array} & \begin{array} { c } \text { Price of a } \\\text { Calculator }\end{array} \\\hline 2006 & \$ 24 & \$ 8 \\\hline 2007 & \$ 30 & \$ 12 \\\hline 2008 & \$ 32 & \$ 15 \\\hline\end{array}$ -Refer to Table 11-3. If 2006 is the base year, then the consumer price index was

In an imaginary economy, consumers buy only sandwiches and magazines. The fixed basket consists of 20 sandwiches and 30 magazines. In 2006, a sandwich cost $4 and a magazine cost $2. In 2007, a sandwich cost $5. The base year is 2006. If the inflation rate in 2007 was 16 percent, then how much did a magazine cost in 2007?

When the consumer price index falls, the typical family

When consumer spending is broken down into the major categories of goods and services, the largest single category is spending on transportation.

Babe Ruth, the famous baseball player, earned $80,000 in 1931. Today, the best baseball players can earn more than 400 times as much as Babe Ruth earned in 1931. However, prices have also risen since 1931. We can conclude that

Pauline is offered a Job in Minneapolis that pays $80,000. She is offered a similar job in Louisville that pays $71,200. Which pair of CPIs would ensure that the two salaries have the same purchasing power?

The consumer price index was 225 in 2006 and 234 in 2007. The nominal interest rate during this period was 6.5 percent. What was the real interest rate during this period?

Ruben earned a salary of $60,000 in 2001 and $80,000 in 2006. The consumer price index was 177 in 2001 and 221.25 in 2006. Ruben's 2006 salary in 2001 dollars is

When the consumer price index falls, the typical family has to spend fewer dollars to maintain the same standard of living.

Table 11-5 The table below pertains to Napandsnack, an economy in which the typical consumer's basket consists of 2 pillows and 15 hotdogs. $\begin{array} { | c | c | c | } \hline \text { Year } & \begin{array} { c } \text { Price of a } \\\text { pilldw }\end{array} & \begin{array} { c } \text { Price af a } \\\text { Hotdlog }\end{array} \\\hline 2009 & \$ 40 & \$ 3 \\\hline 2010 & \$ 45 & \$ 4 \\\hline 2011 & \$ 50 & \$ 3 \\\hline\end{array}$ -Refer to Table 11-5. If the base year is 2010, then the economy's inflation rate in 2010 was