Question 1

The CPI bias was estimated by the Congressional Advisory Commission on the Consumer Price Index as

Accepted Answer

A)  overstating the actual inflation rate by about 1 percentage point a year.
B)  understating the actual inflation rate by about 1 percentage point a year.
C)  understating the actual inflation rate by about 5 percentage points a year.
D)  understating the actual inflation rate by more than 5 percentage points a year.
E)  overstating the actual inflation rate by more than 5 percentage points a year.F) A) and E)
G) B) and C)

Question 2

The real interest rate equals the

Accepted Answer

A)  nominal interest rate - inflation rate.
B)  inflation rate - nominal interest rate.
C)  (nominal interest rate + inflation rate) × 100.
D)  nominal interest rate + inflation rate.
E)  (nominal interest rate ÷ inflation rate) .F) B) and C)
G) A) and D)

Question 3

The Consumer Price Index measures the average of the prices paid by urban consumers for a_________
Of consumer goods and services.

Accepted Answer

A)  subjective selection
B)  random selection
C)  fixed market basket
D)  least-cost market basket
E)  changing selectionF) B) and C)
G) A) and E)

Question 4

The -------------is the average hourly wage rate measured in current dollars, while the -------------is the average hourly rate measured in the dollars of a given reference base year.

Accepted Answer

A)  real interest rate; nominal interest rate
B)  nominal wage rate; real wage rate
C)  nominal interest rate; real interest rate
D)  real wage rate; nominal wage rate
E)  inflation rate; real wage rateF) B) and E)
G) A) and E)

Question 5

Item  Quantity (2000)  Price (2000)  Price (2010)  Movie tickets 4$5.00$7.50 Bags of popcorn 2$3.00$3.00 Cups of Mt. Dew 4$1.00$1.50\begin{array} { l c c l } \hline { \text { Item } } & \begin{array} { c } \text { Quantity } \( \mathbf { 2 0 0 0 )  }\end{array} & \begin{array} { c } \text { Price } \\mathbf { ( 2 0 0 0 )  }\end{array} & \begin{array} { c } \text { Price } \\mathbf { ( 2 0 1 0 )  }\end{array} \\hline \text { Movie tickets } & 4 & \$ 5.00 & \$ 7.50 \\text { Bags of popcorn } & 2 & \$ 3.00 & \$ 3.00 \\text { Cups of Mt. Dew } & 4 & \$ 1.00 & \$ 1.50 \\hline\end{array} Item  Movie tickets  Bags of popcorn  Cups of Mt. Dew ​ Quantity (2000) ​424​ Price (2000) ​$5.00$3.00$1.00​ Price (2010) ​$7.50$3.00$1.50​​ 
The information in the above table gives the 2000 base period market basket and prices used to construct the CPI for a small nation. The table also has 2010 prices.
- What is the value of the CPI for
2010?

Accepted Answer

A)  71.4
B)  100
C)  133
D)  140
E)  142 F) A) and C)
G) A) and D)

Question 6

To find the cost of the CPI market basket in the base period prices we have to multiply the

Accepted Answer

A)  current period quantities in the CPI market basket by the base period prices.
B)  quantities in the CPI market basket by the base period prices.
C)  current period quantities in the CPI market basket by the current period prices.
D)  quantities in the CPI market basket by the base period prices and then multiply by 100.
E)  quantities in the CPI market basket by the current period prices.F) B) and E)
G) D) and E)

Question 7

Real GDP is $1,400 billion and nominal GDP is $1,800. The GDP price index equals

Accepted Answer

A)  2.86.
B)  222.2.
C)  100.0.
D)  128.6.
E)  77.0.F) A) and C)
G) B) and C)

Question 8

If the GDP price index is 137, this value means that prices have increased

Accepted Answer

A)  63 percent since the base year.
B)  37 percent in the last year.
C)  137 percent in the last year.
D)  37 percent since the base year.
E)  137 percent since the base year.F) None of the above
G) B) and E)

Question 9

In the United States for the last 40 years, the nominal interest rate

Accepted Answer

A)  and real interest rates were both constant in almost every year.
B)  exceeded the real interest rate in virtually all the years.
C)  and real interest rates both decreased in almost every year.
D)  exceeded the real interest rate in about one half of the years and the real interest rate was greater than the nominal interest rate in the other half of the years.
E)  was constant in most years and the real interest rate fluctuated.F) B) and D)
G) C) and E)

Question 10

The Consumer Price Index measures the average prices paid by

Accepted Answer

A)  businesses and consumers for a market basket of goods and services.
B)  businesses for a fixed market basket of resources.
C)  urban consumers for the goods and services that most frequently change in price.
D)  businesses for the most frequently used basket of resources.
E)  urban consumers for a fixed market basket of goods and services.F) B) and D)
G) A) and B)

Question 11

In 2013, the reference base period for the CPI for the nation of Wobet, a typical consumer spent $30 on potatoes and $150 on steak. Which of the following is true?

Accepted Answer

A)  We cannot say exactly how many of each good are in the basket.
B)  The quantity of the two goods in the basket is the same.
C)  The quantity of steak in the basket is larger than the quantity of potatoes.
D)  The quantity of potatoes in the basket is larger than the quantity of steak.
E)  None of the above answers is correct.F) A) and E)
G) A) and D)

Question 12

The CPI is calculated by the Bureau of Labor Statistics on a frequency of every

Accepted Answer

A)  decade, along with the Census.
B)  quarter.
C)  year.
D)  week.
E)  month.F) A) and E)
G) All of the above

Question 13

If the nominal wage is $30 in 2011 and the CPI is 202 in 2011, then the real wage in 1982-1984
Dollars

Accepted Answer

A)  is $29.00.
B)  is $14.85.
C)  is $1.48.
D)  is $30.
E)  cannot be calculated without the past year wage rate.F) C) and D)
G) A) and E)

Question 14

The GDP price index can be interpreted as

Accepted Answer

A)  (nominal GDP - real GDP) ÷ 100.
B)  (real GDP - nominal GDP) ÷ 100.
C)  (nominal GDP ÷ real GDP) × 100.
D)  (nominal GDP + real GDP) ÷ 100.
E)  (real GDP ÷ nominal GDP) × 100.F) B) and C)
G) A) and E)

Question 15

If a country had a CPI of 105.0 last year and a CPI of 102.0 this year, then

Accepted Answer

A)  the average prices of goods and services increased between last year and this year.
B)  there was an error when calculating the CPI this year.
C)  the quantity of consumer goods and services produced decreased between last year and this year.
D)  the average prices of goods and services decreased between last year and this year.
E)  the average quality of goods and services decreased between last year and this year.F) All of the above
G) A) and B)

Question 16

If a private wage contract is agreed upon with a cost of living adjustment such that wage hikes are equal to increases in the CPI,

Accepted Answer

A)  the CPI bias means that workers benefit if the price level rises and the employer benefits if the price level falls.
B)  workers exactly keep pace with changes in the cost of living.
C)  workers benefit because the CPI increases more rapidly than does the cost of living.
D)  the employer benefits because wages will rise less than the change in actual prices.
E)  the CPI bias means that workers benefit if the price level falls and the employer benefits if the price level rises.F) A) and B)
G) A) and C)

Question 17

If we look at the nominal versus real wage rates paid to Presidents over time, we find that

Accepted Answer

A)  George W. Bush is the highest paid according to real wage rates.
B)  George Washington was paid a higher real wage rate than Bill Clinton.
C)  the real wage rate has steadily increased to $400,000 per year.
D)  George W. Bush's nominal wage is about equal to the average nominal wage paid all presidents.
E)  the nominal wage has increased and decreased at different times because of inflation.F) All of the above
G) B) and C)

Question 18

In a small, agricultural nation, consumers buy only steak and potatoes. In 2009, the base year, the typical consumer spent $potatoes on strawberries and $100 on steak. The price of potatoes is $1 and the price of steak is $2 in 2009. In 2009, the price of potatoes is $2 and the price of steak is $1. The CPI for 2010 is

Accepted Answer

A)  25 percent.
B)  100.
C)  110.
D)  80.
E)  125.F) None of the above
G) D) and E)

Question 19

Which of the following formulas is used to calculate the inflation rate?

Accepted Answer

A)   inflation rate  =100×( CPI in current year  CPI in base period )  =100 	imes\left(\frac{	ext { CPI in current year }}{	ext { CPI in base period }}ight)  =100×( CPI in base period  CPI in current year ​)  
B)   Inflation rate  =100×( CPI in current year - CPI in previous year  CPI in previous year )  =100 	imes \left (\frac{	ext { CPI in current year - CPI in previous year }}{	ext { CPI in previous year }}ight)  =100×( CPI in previous year  CPI in current year - CPI in previous year ​)  
C)   Inflation rate  =100×( CPI in previous year - CPI in current year  CPI in current year )  =100 	imes \left (\frac{	ext { CPI in previous year - CPI in current year }}{	ext { CPI in current year }}ight)  =100×( CPI in current year  CPI in previous year - CPI in current year ​)  
D)   inflation rate  =100×( CPI in previous year  CPI in current year )  =100 	imes\left(\frac{	ext { CPI in previous year }}{	ext { CPI in current year }}ight)  =100×( CPI in current year  CPI in previous year ​)  
E)   inflation rate  =100×( CPI in base year  CPI in current year )  =100 	imes\left(\frac{	ext { CPI in base year }}{	ext { CPI in current year }}ight)  =100×( CPI in current year  CPI in base year ​) F) C) and D)
G) A) and E)

Question 20

The GDP deflator is a measure of

Accepted Answer

A)  changes in nominal GDP.
B)  taxes and subsidies.
C)  depreciation.
D)  prices.
E)  changes in quantities.F) B) and C)
G) A) and B)

Exam 7: The Cpi and the Cost of Living

If the nominal wage is $30 in 2011 and the CPI is 202 in 2011, then the real wage in 1982-1984 Dollars

Correct Answer
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Correct Answer
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The GDP deflator is a measure of

Correct Answer
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The CPI bias was estimated by the Congressional Advisory Commission on the Consumer Price Index as

Correct Answer
verified

The Consumer Price Index measures the average prices paid by

Correct Answer
verified

The _{-------------}is the average hourly wage rate measured in current dollars, while the _{-------------}is the average hourly rate measured in the dollars of a given reference base year.

Correct Answer
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In 2013, the reference base period for the CPI for the nation of Wobet, a typical consumer spent $30 on potatoes and $150 on steak. Which of the following is true?

Correct Answer
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Correct Answer
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If we look at the nominal versus real wage rates paid to Presidents over time, we find that

Correct Answer
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Real GDP is $1,400 billion and nominal GDP is $1,800. The GDP price index equals

Correct Answer
verified

The GDP price index can be interpreted as

Correct Answer
verified

In the United States for the last 40 years, the nominal interest rate

Correct Answer
verified

The real interest rate equals the

Correct Answer
verified

If a private wage contract is agreed upon with a cost of living adjustment such that wage hikes are equal to increases in the CPI,

Correct Answer
verified

The CPI is calculated by the Bureau of Labor Statistics on a frequency of every

Correct Answer
verified

If a country had a CPI of 105.0 last year and a CPI of 102.0 this year, then

Correct Answer
verified

If the GDP price index is 137, this value means that prices have increased

Correct Answer
verified

Which of the following formulas is used to calculate the inflation rate?

Correct Answer
verified

The Consumer Price Index measures the average of the prices paid by urban consumers for a_________ Of consumer goods and services.

Correct Answer
verified

To find the cost of the CPI market basket in the base period prices we have to multiply the

Correct Answer
verified

Exam 7: The Cpi and the Cost of Living

If the nominal wage is $30 in 2011 and the CPI is 202 in 2011, then the real wage in 1982-1984 Dollars

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The GDP deflator is a measure of

Correct AnswerverifiedShow Answer

The CPI bias was estimated by the Congressional Advisory Commission on the Consumer Price Index as

Correct AnswerverifiedShow Answer

The Consumer Price Index measures the average prices paid by

Correct AnswerverifiedShow Answer

The -------------is the average hourly wage rate measured in current dollars, while the -------------is the average hourly rate measured in the dollars of a given reference base year.

Correct AnswerverifiedShow Answer

In 2013, the reference base period for the CPI for the nation of Wobet, a typical consumer spent $30 on potatoes and $150 on steak. Which of the following is true?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If we look at the nominal versus real wage rates paid to Presidents over time, we find that

Correct AnswerverifiedShow Answer

Real GDP is $1,400 billion and nominal GDP is $1,800. The GDP price index equals

Correct AnswerverifiedShow Answer

The GDP price index can be interpreted as

Correct AnswerverifiedShow Answer

In the United States for the last 40 years, the nominal interest rate

Correct AnswerverifiedShow Answer

The real interest rate equals the

Correct AnswerverifiedShow Answer

If a private wage contract is agreed upon with a cost of living adjustment such that wage hikes are equal to increases in the CPI,

Correct AnswerverifiedShow Answer

The CPI is calculated by the Bureau of Labor Statistics on a frequency of every

Correct AnswerverifiedShow Answer

If a country had a CPI of 105.0 last year and a CPI of 102.0 this year, then

Correct AnswerverifiedShow Answer

If the GDP price index is 137, this value means that prices have increased

Correct AnswerverifiedShow Answer

Which of the following formulas is used to calculate the inflation rate?

Correct AnswerverifiedShow Answer

The Consumer Price Index measures the average of the prices paid by urban consumers for a_________ Of consumer goods and services.

Correct AnswerverifiedShow Answer

To find the cost of the CPI market basket in the base period prices we have to multiply the

Correct AnswerverifiedShow Answer

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The _{-------------}is the average hourly wage rate measured in current dollars, while the _{-------------}is the average hourly rate measured in the dollars of a given reference base year.

Correct Answer
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