Question 1

The Consumer Price Index (1982-1984 = 100)  in 2016 was about 237.1. The CPI in 1930 (same base)  was 16.7. The New York Yankees paid Babe Ruth $80,000 in 1930, an enormous salary for an athlete in those days. The buying power of the Babe's salary in 2016 dollars is about:

Accepted Answer

A)   $594,042.
B)   $1,077,365.
C)   $1,135,808.
D)   $16,656,000.
E)   $17,992,000.F) A) and B)
G) None of the above

Question 2

The 2008 CPI (1982-84 = 100)  was 218.8. The CPI component for educational books and supplies was 459. This means that

Accepted Answer

A)   educational books and supplies costs rose 459%, while overall prices rose only 218.8%.
B)   educational books and supplies costs rose 359%, while overall prices rose only 118.8%.
C)   the average educational books and supplies cost was more than four times as high in 2008 as it was in the 1982-84 period, while, overall, prices were only about 2.2 times as high.
D)   Both "educational books and supplies costs rose 459%, while overall prices rose only 218.8%" and "the average educational books and supplies cost was more than four times as high in 2008 as it was in the 1982-84 period, while, overall, prices were only about 2.2 times as high" are true.
E)   Both "educational books and supplies costs rose 359%, while overall prices rose only 118.8%" and "the average educational books and supplies cost was more than four times as high in 2008 as it was in the 1982-84 period, while, overall, prices were only about 2.2 times as high" are true.F) B) and C)
G) A) and E)

Question 3

In 2011, consumers tended to buy bigger-screen TV sets than they did in the 1982-84 base period. How does the CPI reflect this fact?

Accepted Answer

A)   It doesn't because it uses a fixed market basket.
B)   It can't possibly because, if it did, the price of TVs would have gone up instead of down.
C)   Every month, there is a new Consumer Expenditure Survey, which records what consumers actually buy, so the market basket changes every month.
D)   The Bureau of Labor Statistics (BLS)  adjusts the actual price to subtract out the part that pays for improved quality.
E)   The BLS corrects by using a different base period.F) B) and E)
G) A) and E)

Question 4

In-state tuition and fees at Virginia Commonwealth University (VCU)  was $9517 for the 2011-12 academic year. The CPI for 2011 was 224.9 and the CPI for 2001 was 177.1. What is the 2011-2012 tuition in 2001 dollars?

Accepted Answer

A)   $1270
B)   $1642
C)   $7494
D)   $7875
E)   $12,086F) A) and B)
G) A) and E)

Question 5

Most economists agree that the Consumer Price Index slightly overstates the rate of inflation (the decline in the dollar's buying power) . The main reason is that the

Accepted Answer

A)   CPI is not based on a randomized comparative experiment.
B)   CPI uses 1982-84 = 100, and this has become out of date.
C)   CPI market basket is just a guess at what people really buy; it should be replaced by a random sample of goods and services.
D)   CPI doesn't use a standard score, so changes in the standard deviation affect the value of the CPI.
E)   fixed market basket doesn't adjust quickly enough for new products and improvements in quality.F) A) and E)
G) B) and E)

Question 6

The federal minimum wage was $7.25 an hour after it was increased in 2009. In 1980, the minimum wage was $3.25 an hour. The CPI (1982-84 = 100)  was 82.4 in 1980 and was 214.5 in 2009. Which of the following is true?

Accepted Answer

A)   The 1980 minimum wage is about $8.46 in 2009 dollars, so the minimum wage has gone down in real terms.
B)   The 1980 minimum wage is about $8.46 in 2009 dollars, so the minimum wage has gone up in real terms.
C)   The 1980 minimum wage is about $1.25 in 2009 dollars, so the minimum wage has gone down in real terms.
D)   The 1980 minimum wage is about $1.25 in 2009 dollars, so the minimum wage has gone up in real terms.
E)   The 1980 minimum wage is about $4.50 in 2009 dollars, so the minimum wage has gone up in real terms.F) A) and C)
G) B) and D)

Question 7

A pound of ground coffee cost $2.47 in 1992 and $6.50 in 2016. The ground coffee price index number (1992 = 100)  for 2016 is:

Accepted Answer

A)   (6.50/2.47)  × 100 = 263.2.
B)   (2.47/6.50)  × 100 = 38.0.
C)   (6.50 - 2.47)  × 100 = 403.0.
D)   (6.50 - 2.47) /(2016-1992)  = 0.168.
E)   (6.50 - 2.47) /(2016-1992)  × 100 = 16.8.F) B) and E)
G) A) and B)

Question 8

Athletes make more now, but prices are also higher than in the past. In 2013 the basketball player Stephen Curry signed a contract for $44 million with the Golden State Warriors. How much is this in 1975 dollars? (The CPI was 53.8 in 1975 and was 233.9 in 2013.)

Accepted Answer

A)   About $308 million
B)   About $37 million
C)   About $90 million
D)   About $26 million
E)   About $16 millionF) None of the above
G) A) and D)

Question 9

The 2007 in-state tuition at the university in the previous question was $7884. So your calculation in the previous question shows that, in the 1989-2007 period,

Accepted Answer

A)   tuition stayed the same in real terms.
B)   tuition went up in real terms.
C)   tuition went down in real terms.
D)   Can't tell without more information.E) All of the above
F) None of the above

Question 10

Some people buy the stock of small companies. The Russell 2000 index, which tracks the price of such shares, was 772 on December 31, 2007. On December 31, 2015, the index was 1,200. What percent increase is this?

Accepted Answer

A)   438 percent
B)   43.8 percent
C)   35.7 percent
D)   55.4 percentE) A) and B)
F) A) and C)

Question 11

The Consumer Price Index (1982-84 = 100)  was about 207 in 2007. In 1989, the CPI was 124. Tuition for in-state students at one Big Ten university was $2032 in 1989. In 2007 dollars, this tuition is equivalent to

Accepted Answer

A)   2032 × (2007/1989)  = $2050.
B)   2032 × (207/100)  = $4206.
C)   2032 × (124/207)  = $1217.
D)   2032 × (207/124)  = $3392.E) B) and C)
F) A) and B)

Exam 16: The Consumer Price Index and Government Statistics

The 2007 in-state tuition at the university in the previous question was $7884. So your calculation in the previous question shows that, in the 1989-2007 period,

Correct Answer
verified

The federal minimum wage was $7.25 an hour after it was increased in 2009. In 1980, the minimum wage was $3.25 an hour. The CPI (1982-84 = 100) was 82.4 in 1980 and was 214.5 in 2009. Which of the following is true?

Correct Answer
verified

Athletes make more now, but prices are also higher than in the past. In 2013 the basketball player Stephen Curry signed a contract for $44 million with the Golden State Warriors. How much is this in 1975 dollars? (The CPI was 53.8 in 1975 and was 233.9 in 2013.)

Correct Answer
verified

A pound of ground coffee cost $2.47 in 1992 and $6.50 in 2016. The ground coffee price index number (1992 = 100) for 2016 is:

Correct Answer
verified

Some people buy the stock of small companies. The Russell 2000 index, which tracks the price of such shares, was 772 on December 31, 2007. On December 31, 2015, the index was 1,200. What percent increase is this?

Correct Answer
verified

In 2011, consumers tended to buy bigger-screen TV sets than they did in the 1982-84 base period. How does the CPI reflect this fact?

Correct Answer
verified

The Consumer Price Index (1982-1984 = 100) in 2016 was about 237.1. The CPI in 1930 (same base) was 16.7. The New York Yankees paid Babe Ruth $80,000 in 1930, an enormous salary for an athlete in those days. The buying power of the Babe's salary in 2016 dollars is about:

Correct Answer
verified

In-state tuition and fees at Virginia Commonwealth University (VCU) was $9517 for the 2011-12 academic year. The CPI for 2011 was 224.9 and the CPI for 2001 was 177.1. What is the 2011-2012 tuition in 2001 dollars?

Correct Answer
verified

The Consumer Price Index (1982-84 = 100) was about 207 in 2007. In 1989, the CPI was 124. Tuition for in-state students at one Big Ten university was $2032 in 1989. In 2007 dollars, this tuition is equivalent to

Correct Answer
verified

Most economists agree that the Consumer Price Index slightly overstates the rate of inflation (the decline in the dollar's buying power) . The main reason is that the

Correct Answer
verified

The 2008 CPI (1982-84 = 100) was 218.8. The CPI component for educational books and supplies was 459. This means that

Correct Answer
verified

Exam 16: The Consumer Price Index and Government Statistics

The 2007 in-state tuition at the university in the previous question was $7884. So your calculation in the previous question shows that, in the 1989-2007 period,

Correct AnswerverifiedShow Answer

The federal minimum wage was $7.25 an hour after it was increased in 2009. In 1980, the minimum wage was $3.25 an hour. The CPI (1982-84 = 100) was 82.4 in 1980 and was 214.5 in 2009. Which of the following is true?

Correct AnswerverifiedShow Answer

Athletes make more now, but prices are also higher than in the past. In 2013 the basketball player Stephen Curry signed a contract for $44 million with the Golden State Warriors. How much is this in 1975 dollars? (The CPI was 53.8 in 1975 and was 233.9 in 2013.)

Correct AnswerverifiedShow Answer

A pound of ground coffee cost $2.47 in 1992 and $6.50 in 2016. The ground coffee price index number (1992 = 100) for 2016 is:

Correct AnswerverifiedShow Answer

Some people buy the stock of small companies. The Russell 2000 index, which tracks the price of such shares, was 772 on December 31, 2007. On December 31, 2015, the index was 1,200. What percent increase is this?

Correct AnswerverifiedShow Answer

In 2011, consumers tended to buy bigger-screen TV sets than they did in the 1982-84 base period. How does the CPI reflect this fact?

Correct AnswerverifiedShow Answer

The Consumer Price Index (1982-1984 = 100) in 2016 was about 237.1. The CPI in 1930 (same base) was 16.7. The New York Yankees paid Babe Ruth $80,000 in 1930, an enormous salary for an athlete in those days. The buying power of the Babe's salary in 2016 dollars is about:

Correct AnswerverifiedShow Answer

In-state tuition and fees at Virginia Commonwealth University (VCU) was $9517 for the 2011-12 academic year. The CPI for 2011 was 224.9 and the CPI for 2001 was 177.1. What is the 2011-2012 tuition in 2001 dollars?

Correct AnswerverifiedShow Answer

The Consumer Price Index (1982-84 = 100) was about 207 in 2007. In 1989, the CPI was 124. Tuition for in-state students at one Big Ten university was $2032 in 1989. In 2007 dollars, this tuition is equivalent to

Correct AnswerverifiedShow Answer

Most economists agree that the Consumer Price Index slightly overstates the rate of inflation (the decline in the dollar's buying power) . The main reason is that the

Correct AnswerverifiedShow Answer

The 2008 CPI (1982-84 = 100) was 218.8. The CPI component for educational books and supplies was 459. This means that

Correct AnswerverifiedShow Answer

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