Question 1

Data from the Bureau of Labor Statistics show that consumer spending on transportation is only slightly higher than consumer spending on food and beverages.

Accepted Answer

A) True 
 B)False

Question 2

Categories of U.S. consumer spending, ranked from largest to smallest, are

Accepted Answer

A)   housing, food & beverages, education & communication, and transportation.
B)   education & communication, housing, food & beverages, and transportation.
C)   food & beverages, housing, transportation, and medical care.
D)   housing, transportation, food & beverages, and medical care.E) B) and C)
F) All of the above

Question 3

An increase in the price of bread 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) B) and D)
F) A) and C)

Question 4

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

Question 5

The price index was 136 in one year and 142 in the next year. What was the inflation rate between the two years?

Accepted Answer

A)   1.04 percent
B)   4.41 percent
C)   6.00 percent
D)   42.00 percentE) A) and B)
F) All of the above

Question 6

When the overall level of prices in the economy is increasing, economists say that the economy is experiencing

Accepted Answer

A)   economic growth.
B)   stagflation.
C)   inflation.
D)   deflation.E) A) and D)
F) C) and D)

Question 7

If the value of the consumer price index is 110 in 2005 and 121 in 2006, then the inflation rate is 11 percent for 2006.

Accepted Answer

A) True 
 B)False

Question 8

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. The cost of the basket in 2013 was

Accepted Answer

A)   $150.50.
B)   $147.
C)   $154.
D)   $301.E) A) and D)
F) All of the above

Question 9

For a country like the United States, explain why the CPI would increase at a faster rate than the GDP deflator during periods of oil and gasoline price increases.

Accepted Answer

The U.S. i...

Question 10

Suppose the quality of televisions changes over time, but the quality change goes unmeasured for the purpose of computing the consumer price index. In which of the following instances would the bias resulting from the unmeasured quality change be most severe?

Accepted Answer

A)   The quality of televisions deteriorates and televisions become more expensive relative to other goods.
B)   The quality of televisions improves and televisions become less expensive relative to other goods.
C)   The quality of televisions improves and televisions become more expensive relative to other goods.
D)   The quality of televisions deteriorates and the price of televisions relative to other prices remains unchanged.E) A) and D)
F) A) and C)

Question 11

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

Question 12

When we are calculating the consumer price index and the inflation rate for a certain year,

Accepted Answer

A)   the value of the consumer price index may depend on the choice of a base year, but the inflation rate does not depend on the choice of a base year.
B)   the inflation rate may depend on the choice of a base year, but the value of the consumer price index does not depend on the choice of a base year.
C)   both the value of the consumer price index and the inflation rate may depend on the choice of a base year.
D)   neither the value of the consumer price index nor the inflation rate depends on the choice of a base year.E) A) and B)
F) B) and C)

Question 13

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) A) and D)
F) B) and C)

Question 14

In the United States, real interest rates were

Accepted Answer

A)   high in the 1970s and 1990s.
B)   low in the 1970s and 1990s.
C)   high in the 1970s and low in the 1990s.
D)   low in the 1970s and high in the 1990s.E) A) and D)
F) B) and C)

Question 15

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 2009, then the economy's inflation rate in 2010 is

Accepted Answer

A)   20 percent.
B)   25 percent.
C)   30 percent.
D)   120 percent.E) A) and D)
F) C) and D)

Question 16

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

Accepted Answer

A)   a typical consumer, and the CPI is computed and reported by the Department of the Treasury.
B)   typical consumers and typical business firms, and the CPI is computed and reported by the Department of the Treasury.
C)   a typical consumer, and the CPI is computed and reported by the Bureau of Labor Statistics.
D)   typical consumers and typical business firms, and the CPI is computed and reported by the Bureau of Labor Statistics.E) A) and C)
F) C) and D)

Question 17

Between October 2014 and October 2015, the CPI in Canada rose from 120 to 124 and the CPI in Mexico rose from 210 to 229.1. What were the inflation rates for Canada and Mexico over this one-year period?

Accepted Answer

A)   3.3 percent for Canada and 9.1 percent for Mexico
B)   3.3 percent for Canada and 8.3 percent for Mexico
C)   3.2 percent for Canada and 9.1 percent for Mexico
D)   3.2 percent for Canada and 8.3 percent for MexicoE) A) and B)
F) B) and C)

Question 18

In which of the following cases would there be an effect on the value of the U.S. consumer price index, but not on the value of the U.S. GDP deflator?

Accepted Answer

A)   All of the truck tires that are produced by a certain company in South Korea are sold to the U.S. military, and the price of these tires decreases.
B)   All of the truck tires that are produced by a certain company in California are sold to the U.S. military, and the price of these tires decreases.
C)   Most of the bananas that are produced by a certain company in Honduras end up in U.S. grocery stores, and the price of these bananas increases.
D)   Most of the earth-moving machines that are produced by a certain company in Illinois are exported to other countries, and the price of these machines increases.E) None of the above
F) B) and D)

Question 19

The U.S. income tax system is completely indexed for inflation.

Accepted Answer

A) True 
 B)False

Question 20

Table 24-1
The table below lists annual consumer price index and inflation rates for a country over the period 2005-2010. Assume the year 2005 is used as the base year.
 
-Refer to Table 24-1. What belongs in space A?

Accepted Answer

A)   14
B)   150
C)   144
D)   154E) A) and D)
F) B) and D)

Exam 6: Measuring the Cost of Living

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. The cost of the basket in 2013 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 2009, then the economy's inflation rate in 2010 is

Correct AnswerverifiedShow Answer

When the overall level of prices in the economy is increasing, economists say that the economy is experiencing

Correct AnswerverifiedShow 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

When we are calculating the consumer price index and the inflation rate for a certain year,

Correct AnswerverifiedShow Answer

In which of the following cases would there be an effect on the value of the U.S. consumer price index, but not on the value of the U.S. GDP deflator?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

For a country like the United States, explain why the CPI would increase at a faster rate than the GDP deflator during periods of oil and gasoline price increases.

Correct AnswerverifiedThe U.S. i...View AnswerShow Answer

The U.S. income tax system is completely indexed for inflation.

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

Table 24-1 The table below lists annual consumer price index and inflation rates for a country over the period 2005-2010. Assume the year 2005 is used as the base year. -Refer to Table 24-1. What belongs in space A?

Correct AnswerverifiedShow Answer

If the value of the consumer price index is 110 in 2005 and 121 in 2006, then the inflation rate is 11 percent for 2006.

Correct AnswerverifiedShow Answer

In the United States, real interest rates were

Correct AnswerverifiedShow Answer

An increase in the price of bread produced domestically will be reflected in

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Between October 2014 and October 2015, the CPI in Canada rose from 120 to 124 and the CPI in Mexico rose from 210 to 229.1. What were the inflation rates for Canada and Mexico over this one-year period?

Correct AnswerverifiedShow Answer

Suppose the quality of televisions changes over time, but the quality change goes unmeasured for the purpose of computing the consumer price index. In which of the following instances would the bias resulting from the unmeasured quality change be most severe?

Correct AnswerverifiedShow Answer

Data from the Bureau of Labor Statistics show that consumer spending on transportation is only slightly higher than consumer spending on food and beverages.

Correct AnswerverifiedShow Answer

The price index was 136 in one year and 142 in the next year. What was the inflation rate between the two years?

Correct AnswerverifiedShow Answer

Categories of U.S. consumer spending, ranked from largest to smallest, are

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The U.S. i...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified