Question 1

An important difference between the GDP deflator and the consumer price index is that

Accepted Answer

A)   the GDP deflator reflects the prices of goods and services bought by producers,whereas the consumer price index reflects the prices of goods and services bought by consumers.
B)   the GDP deflator reflects the prices of all final goods and services produced domestically,whereas the consumer price index reflects the prices of goods and services bought by consumers.
C)   the GDP deflator reflects the prices of all final goods and services produced by a nation's citizens,whereas the consumer price index reflects the prices of all final goods and services bought by consumers.
D)   the GDP deflator reflects the prices of all final goods and services bought by producers and consumers,whereas the consumer price index reflects the prices of all final goods and services bought by consumers.E) A) and D)
F) B) and D)

Question 2

If the quality of a good deteriorates from one year to the next while its price remains the same,then the value of a dollar falls.

Accepted Answer

A) True 
 B)False

Question 3

Table 11-11.Megan's salary for three consecutive years,along with other values,are presented in the table below.
 
-Refer to Table 11-11.Megan's 2008 salary in 2010 dollars is

Accepted Answer

A)   $51,458.
B)   $62,226.
C)   $69,960.
D)   $75,554.E) A) and B)
F) A) and C)

Question 4

Data from the Bureau of Labor Statistics show that consumer spending on medical care is about equal to consumer spending on recreation and consumer spending on education and communication.

Accepted Answer

A) True 
 B)False

Question 5

Jake loaned Elwood $5,000 for one year at a nominal interest rate of 10 percent.After Elwood repaid the loan in full,Jake complained that he could buy 4 percent fewer goods with the money Elwood gave him than he could before he loaned Elwood the $5,000.From this,we can conclude that the rate of inflation during the year was

Accepted Answer

A)   -4 percent.
B)   4 percent.
C)   6 percent.
D)   14 percent.E) B) and C)
F) A) and D)

Question 6

Table 11-11.Megan's salary for three consecutive years,along with other values,are presented in the table below.
 
-Refer to Table 11-11.Suppose the consumer price index for 2010 is not necessarily 233.2.If the nominal interest rate for 2010 is 7.3 percent ,then the consumer price index for 2010 is,in fact,

Accepted Answer

A)   210.00.
B)   216.06.
C)   220.48.
D)   226.26.E) C) and D)
F) A) and D)

Question 7

If the consumer price index is 120 in 2009 and 139.2 in 2010,then the rate of inflation for 2010 is 39.2 percent.

Accepted Answer

A) True 
 B)False

Question 8

It is possible to observe a positive nominal interest rate together with a negative real interest rate.

Accepted Answer

A) True 
 B)False

Question 9

In the basket of goods that is used to compute the consumer price index,which of the following categories of consumer spending is the smallest?

Accepted Answer

A)   food & beverages
B)   recreation
C)   housing
D)   apparelE) B) and C)
F) A) and C)

Question 10

Price indexes allow comparisons of dollar figures over time and provide us a sense of how the economy is changing.

Accepted Answer

A) True 
 B)False

Question 11

Assume an economy experienced a positive rate of inflation between 2003 and 2004 and again between 2004 and 2005.However,the inflation rate was higher between 2004 and 2005 than it was between 2003 and 2004.Which of the following scenarios is consistent with this assumption?

Accepted Answer

A)   The CPI was 100 in 2003,110 in 2004,and 105 in 2005.
B)   The CPI was 100 in 2003,120 in 2004,and 135 in 2005.
C)   The CPI was 100 in 2003,105 in 2004,and 130 in 2005.
D)   The CPI was 100 in 2003,90 in 2004,and 88 in 2005.E) None of the above
F) A) and D)

Question 12

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

Accepted Answer

A) True 
 B)False

Exam 24: Measuring the Cost of Living

Assume an economy experienced a positive rate of inflation between 2003 and 2004 and again between 2004 and 2005.However,the inflation rate was higher between 2004 and 2005 than it was between 2003 and 2004.Which of the following scenarios is consistent with this assumption?

Correct Answer
verified

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

Correct Answer
verified

Price indexes allow comparisons of dollar figures over time and provide us a sense of how the economy is changing.

Correct Answer
verified

It is possible to observe a positive nominal interest rate together with a negative real interest rate.

Correct Answer
verified

If the quality of a good deteriorates from one year to the next while its price remains the same,then the value of a dollar falls.

Correct Answer
verified

If the consumer price index is 120 in 2009 and 139.2 in 2010,then the rate of inflation for 2010 is 39.2 percent.

Correct Answer
verified

Correct Answer
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In the basket of goods that is used to compute the consumer price index,which of the following categories of consumer spending is the smallest?

Correct Answer
verified

Table 11-11.Megan's salary for three consecutive years,along with other values,are presented in the table below. -Refer to Table 11-11.Megan's 2008 salary in 2010 dollars is

Correct Answer
verified

An important difference between the GDP deflator and the consumer price index is that

Correct Answer
verified

Data from the Bureau of Labor Statistics show that consumer spending on medical care is about equal to consumer spending on recreation and consumer spending on education and communication.

Correct Answer
verified

Correct Answer
verified

Exam 24: Measuring the Cost of Living

Assume an economy experienced a positive rate of inflation between 2003 and 2004 and again between 2004 and 2005.However,the inflation rate was higher between 2004 and 2005 than it was between 2003 and 2004.Which of the following scenarios is consistent with this assumption?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Price indexes allow comparisons of dollar figures over time and provide us a sense of how the economy is changing.

Correct AnswerverifiedShow Answer

It is possible to observe a positive nominal interest rate together with a negative real interest rate.

Correct AnswerverifiedShow Answer

If the quality of a good deteriorates from one year to the next while its price remains the same,then the value of a dollar falls.

Correct AnswerverifiedShow Answer

If the consumer price index is 120 in 2009 and 139.2 in 2010,then the rate of inflation for 2010 is 39.2 percent.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In the basket of goods that is used to compute the consumer price index,which of the following categories of consumer spending is the smallest?

Correct AnswerverifiedShow Answer

Table 11-11.Megan's salary for three consecutive years,along with other values,are presented in the table below. -Refer to Table 11-11.Megan's 2008 salary in 2010 dollars is

Correct AnswerverifiedShow Answer

An important difference between the GDP deflator and the consumer price index is that

Correct AnswerverifiedShow Answer

Data from the Bureau of Labor Statistics show that consumer spending on medical care is about equal to consumer spending on recreation and consumer spending on education and communication.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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