Question 1

The market basket used to calculate the CPI in Aquilonia is 4 loaves of bread,6 gallons of milk,2 shirts,and 2 pairs of pants.In 2005,bread cost $1.00 per loaf,milk cost $1.50 per gallon,shirts cost $6.00 each,and pants cost $10.00 per pair.In 2006,bread cost $1.50 per loaf,milk cost $2.00 per gallon,shirts cost $7.00 each,and pants cost $12.00 per pair.Using 2005 as the base year,what was Aquilonia's inflation rate in 2006?

Accepted Answer

A)   4 percent
B)   11 percent
C)   19.6 percent
D)   24.4 percentE) A) and B)
F) A) and C)

Question 2

An increase in the price of imported coffee shows up

Accepted Answer

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

Question 3

Table 24-1
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 24-1.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) A) and B)
F) A) and C)

Question 4

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 consumer price index in 2007 was 125,then how much did a magazine cost in 2007?

Accepted Answer

A)   $0.83
B)   $2.25
C)   $2.50
D)   $3.00E) A) and B)
F) A) and C)

Question 5

The CPI is a measure of the overall cost of

Accepted Answer

A)   the inputs purchased by a typical producer.
B)   the goods and services purchased by a typical consumer.
C)   the goods and services produced in the economy.
D)   the stocks on the New York Stock Exchange.E) C) and D)
F) A) and B)

Question 6

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) All of the above
F) A) and C)

Question 7

Table 24-1
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 24-1.If 2010 is the base year,then the consumer price index was

Accepted Answer

A)   77.40 in 2008,85.16 in 2009,and 100.00 in 2010.
B)   50.50 in 2008,67.50 in 2009,and 100.00 in 2010.
C)   90.88 in 2008,85.16 in 2009,and 100.00 in 2010.
D)   169.50 in 2008,186.50 in 2009,and 219.00 in 2010.E) None of the above
F) All of the above

Question 8

Table 11-6.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 11-6.If the base year is 2009,then the economy's inflation rate is

Accepted Answer

A)   10 percent in 2010 and 6.36 percent in 2011.
B)   10 percent in 2010 and 17 percent in 2011.
C)   9.2 percent in 2010 and 6 percent in 2011.
D)   8.22 percent in 2010 and 5 percent in 2011.E) None of the above
F) A) and C)

Question 9

Suppose that the price of one ear of corn was $0.05 in 1920,that the CPI in 1920 was 10,and that in 1990 the CPI was 180.What is the price of a 1920 ear of corn in 1990 dollars?

Accepted Answer

The price of a 1920 ...

Question 10

Wilson is offered a job in Kansas City that pays $50,000 and a job in Dallas that pays $60,000.Which pair of CPIs would ensure that the two salaries have the same purchasing power?

Accepted Answer

A)   80 in Kansas City and 100 in Dallas
B)   125 in Kansas City and 150 in Dallas
C)   100 in Kansas City and 124.5 in Dallas
D)   100 in Kansas City and 140 in DallasE) C) and D)
F) All of the above

Question 11

In 1983,one could buy a model radio-controlled airplane for $11.50 each.Those same planes are available today and the price increased at exactly the rate of inflation.If the CPI today is 220.5 and in 1983 was 105,what is the price of the airplane today?

Accepted Answer

A)   $24.15
B)   $11.50
C)   $5.48
D)   $2.10E) None of the above
F) B) and C)

Question 12

Table 11-6.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 11-6.If the base year is 2010,then the economy's inflation rate in 2010 is

Accepted Answer

A)   8 percent.
B)   10 percent.
C)   10.91 percent.
D)   11.11 percent.E) A) and C)
F) C) and D)

Question 13

In the United States in the late 1970s,nominal interest rates were high and inflation rates were very high.As a result,real interest rates were

Accepted Answer

A)   very high.
B)   high.
C)   low,but never negative.
D)   low,and in some years they were negative.E) A) and B)
F) A) and C)

Question 14

The consumer price index is used to

Accepted Answer

A)   convert nominal GDP into real GDP.
B)   turn dollar figures into meaningful measures of purchasing power.
C)   characterize the types of goods and services that consumers purchase.
D)   measure the quantity of goods and services that the economy produces.E) C) and D)
F) None of the above

Question 15

If the nominal interest rate is 7.5 percent and the rate of inflation is -2.5 percent,then the real interest rate is

Accepted Answer

A)   -10 percent.
B)   -5 percent.
C)   5 percent.
D)   10 percent.E) A) and B)
F) A) and C)

Question 16

In 1949,Sycamore,Illinois built a hospital for about $500,000.In 1987,the county restored the courthouse for about $1.7 million.A price index for nonresidential construction was 24 in 1949,108 in 1987,and 126.5 in 2000.According to these numbers,the hospital cost about

Accepted Answer

A)   $2.1 million in 2000 dollars,which is less than the cost of the courthouse restoration in 2000 dollars.
B)   $2.1 million in 2000 dollars,which is more than the cost of the courthouse restoration in 2000 dollars.
C)   $2.6 million in 2000 dollars,which is less than the cost of the courthouse restoration in 2000 dollars.
D)   $2.6 million in 2000 dollars,which is more than the cost of the courthouse restoration in 2000 dollars.E) B) and D)
F) C) and D)

Question 17

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.E) A) and D)
F) A) and C)

Question 18

Compute how much each of the following items is worth in terms of today's dollars using 177 as the price index for today.
a.
In 1926,the CPI was 17.7 and the price of a movie ticket was $0.25.
b.
In 1932,the CPI was 13.1 and a cook earned $15.00 a week.
c.
In 1943,the CPI was 17.4 and a gallon of gas cost $0.19.

Accepted Answer

a.
The movie ticket is worth $.25177/17....

Question 19

In calculating the CPI,a fixed basket of goods and services is used.The quantities of the goods and services in the fixed basket are determined by

Accepted Answer

A)   surveying consumers.
B)   surveying sellers of the goods and services.
C)   working backward from the rate of inflation to arrive at imputed values for those quantities.
D)   arbitrary choices made by federal government employees.E) C) and D)
F) A) and D)

Question 20

Which of the following statements about real and nominal interest rates is correct?

Accepted Answer

A)   When the nominal interest rate is rising,the real interest rate is necessarily rising;when the nominal interest rate is falling,the real interest rate is necessarily falling.
B)   If the nominal interest rate is 4 percent and the inflation rate is 3 percent,then the real interest rate is 7 percent.
C)   An increase in the real interest rate is necessarily accompanied by either an increase in the nominal interest rate,an increase in the inflation rate,or both.
D)   When the inflation rate is positive,the nominal interest rate is necessarily greater than the real interest rate.E) None of the above
F) C) and D)

Exam 24: Measuring the Cost of Living

In 1949,Sycamore,Illinois built a hospital for about $500,000.In 1987,the county restored the courthouse for about $1.7 million.A price index for nonresidential construction was 24 in 1949,108 in 1987,and 126.5 in 2000.According to these numbers,the hospital cost about

Correct Answer
verified

Table 11-6.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 11-6.If the base year is 2010,then the economy's inflation rate in 2010 is

Correct Answer
verified

Table 24-1 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 24-1.If 2010 is the base year,then the consumer price index was

Correct Answer
verified

Table 11-6.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 11-6.If the base year is 2009,then the economy's inflation rate is

Correct Answer
verified

An increase in the price of imported coffee shows up

Correct Answer
verified

In calculating the CPI,a fixed basket of goods and services is used.The quantities of the goods and services in the fixed basket are determined by

Correct Answer
verified

Suppose that the price of one ear of corn was $0.05 in 1920,that the CPI in 1920 was 10,and that in 1990 the CPI was 180.What is the price of a 1920 ear of corn in 1990 dollars?

Correct Answer
verified
The price of a 1920 ...
View Answer

In 1983,one could buy a model radio-controlled airplane for $11.50 each.Those same planes are available today and the price increased at exactly the rate of inflation.If the CPI today is 220.5 and in 1983 was 105,what is the price of the airplane today?

Correct Answer
verified

Correct Answer
verified

Wilson is offered a job in Kansas City that pays $50,000 and a job in Dallas that pays $60,000.Which pair of CPIs would ensure that the two salaries have the same purchasing power?

Correct Answer
verified

If the nominal interest rate is 7.5 percent and the rate of inflation is -2.5 percent,then the real interest rate is

Correct Answer
verified

Table 24-1 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 24-1.If 2009 is the base year,then the consumer price index was

Correct Answer
verified

Correct Answer
verified

The consumer price index is used to

Correct Answer
verified

Correct Answer
verified
a.
The movie ticket is worth $.25177/17....
View Answer

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

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

In the United States in the late 1970s,nominal interest rates were high and inflation rates were very high.As a result,real interest rates were

Correct Answer
verified

Which of the following statements about real and nominal interest rates is correct?

Correct Answer
verified

The CPI is a measure of the overall cost of

Correct Answer
verified

Exam 24: Measuring the Cost of Living

In 1949,Sycamore,Illinois built a hospital for about $500,000.In 1987,the county restored the courthouse for about $1.7 million.A price index for nonresidential construction was 24 in 1949,108 in 1987,and 126.5 in 2000.According to these numbers,the hospital cost about

Correct AnswerverifiedShow Answer

Table 11-6.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 11-6.If the base year is 2010,then the economy's inflation rate in 2010 is

Correct AnswerverifiedShow Answer

Table 24-1 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 24-1.If 2010 is the base year,then the consumer price index was

Correct AnswerverifiedShow Answer

Table 11-6.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 11-6.If the base year is 2009,then the economy's inflation rate is

Correct AnswerverifiedShow Answer

An increase in the price of imported coffee shows up

Correct AnswerverifiedShow Answer

In calculating the CPI,a fixed basket of goods and services is used.The quantities of the goods and services in the fixed basket are determined by

Correct AnswerverifiedShow Answer

Suppose that the price of one ear of corn was $0.05 in 1920,that the CPI in 1920 was 10,and that in 1990 the CPI was 180.What is the price of a 1920 ear of corn in 1990 dollars?

Correct AnswerverifiedThe price of a 1920 ...View AnswerShow Answer

In 1983,one could buy a model radio-controlled airplane for $11.50 each.Those same planes are available today and the price increased at exactly the rate of inflation.If the CPI today is 220.5 and in 1983 was 105,what is the price of the airplane today?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Wilson is offered a job in Kansas City that pays $50,000 and a job in Dallas that pays $60,000.Which pair of CPIs would ensure that the two salaries have the same purchasing power?

Correct AnswerverifiedShow Answer

If the nominal interest rate is 7.5 percent and the rate of inflation is -2.5 percent,then the real interest rate is

Correct AnswerverifiedShow Answer

Table 24-1 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 24-1.If 2009 is the base year,then the consumer price index was

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The consumer price index is used to

Correct AnswerverifiedShow Answer

Correct Answerverifieda.The movie ticket is worth $.25177/17....View AnswerShow Answer

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

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

In the United States in the late 1970s,nominal interest rates were high and inflation rates were very high.As a result,real interest rates were

Correct AnswerverifiedShow Answer

Which of the following statements about real and nominal interest rates is correct?

Correct AnswerverifiedShow Answer

The CPI is a measure of the overall cost of

Correct AnswerverifiedShow Answer

Correct Answer
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The price of a 1920 ...
View Answer

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a.
The movie ticket is worth $.25177/17....
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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Correct Answer
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