Question 1

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 2

Which of the following is not an example of a price index computed by the Bureau of Labor Statistics?

Accepted Answer

A)  the Los Angeles price index
B)  the energy price index
C)  the producer price index
D)  the stock price indexE) C) and D)
F) None of the above

Question 3

Table 24-12. Will's expenditures on food for three consecutive years, along with other values, are presented in the table below. 
-Refer to Table 24-12. Suppose Will's 2009 food expenditures in 2011 dollars amount to $5,750. Then the inflation rate for 2011 is about

Accepted Answer

A)  9.08 percent.
B)  9.52 percent.
C)  10.24 percent.
D)  10.78 percent.E) B) and D)
F) B) and C) B

Question 4

Table 24-9
The table below lists the per gallon prices of gas and milk for the months of April, May, and June. Assume that the typical consumer buys 60 gallons of gas and 4 gallons of milk each month, and that April is the base period. 
-Refer to Table 24-9. What is the inflation rate for May?

Accepted Answer

A)  66.4%
B)  60.1%
C)  -4.1%
D)  10%E) None of the above
F) B) and D)

Question 5

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

Question 6

Janelle earned a salary of $40,000 in 1996 and $65,000 in 2006. The consumer price index was 160 in 1996 and 266 in 2006. Janelle's 2006 salary in 1996 dollars is

Accepted Answer

A)  $39,097.74.
B)  $43,062.50.
C)  $68,900.00.
D)  $108,062.50.E) C) and D)
F) A) and C) A

Question 7

Suppose a basket of goods and services has been selected to calculate the consumer price index. In 2005, the basket of goods cost $108.00; in 2006, it cost $135.00; and in 2007, it cost $168.75. Which of the following statements is correct?

Accepted Answer

A)  Using 2005 as the base year, the economy's inflation rate was higher in 2007 than it was in 2006.
B)  If 2007 is the base year, then the CPI is 33.75 in 2006.
C)  If the CPI is 156.25 in 2007, then 2005 is the base year.
D)  Using 2005 as the base year, the economy's inflation rate for 2006 was 27 percent.E) All of the above
F) A) and B)

Question 8

Scenario 24-4
Quinn has job offers in Wrexington and across the country in Charlieville. The Wrexington job would pay a salary of $50,000 per year, and the Charlieville job would pay a salary of $40,000 per year. The CPI in Wrexington is 150, and the CPI in Charlieville is 90.
-Refer to Scenario 24-4. If Quinn only cares about maximizing her purchasing power, then she should

Accepted Answer

A)  take the Charlieville job.
B)  take the Wrexington job.
C)  take either job because they both have the same purchasing power.
D)  The answer cannot be determined from the information given because a salary is not the same as purchasing power.E) B) and D)
F) B) and C)

Question 9

Babe Ruth, the famous baseball player, earned $80,000 in 1931. Today, the best baseball players can earn more than 400 times as much as Babe Ruth earned in 1931. However, prices have also risen since 1931. We can conclude that

Accepted Answer

A)  the best baseball players today are about 400 times better off than Babe Ruth was in 1931.
B)  because prices have also risen, the standard of living of baseball stars hasn't changed since 1931.
C)  one cannot make judgments about changes in the standard of living based on changes in prices and changes in incomes.
D)  one cannot determine whether baseball stars today enjoy a higher standard of living than Babe Ruth did in 1931 without additional information regarding increases in prices since 1931.E) A) and D)
F) A) and C) D

Question 10

Core CPI is a price index that only looks at the prices of food and energy and ignores the prices of all other goods and services.

Accepted Answer

A) True 
 B)False

Question 11

Table 24-14
TOPICS:
Price levels
Inflation
KEYWORDS:
BLOOM'S: Application
CUSTOM ID:
020.24 - SAE - MANK08
Table 24-15
The table below lists the prices of chips and salsa for the months of October, November, and December. Assume that the typical consumer buys 8 bags of chips and 4 jars of salsa each month, and that October is the base period. 
-Refer to Table 24-15. Calculate the inflation rate for December.

Accepted Answer

The answer of Table 24-14
TOPICS:
Price levels
Inflation
KEYWORDS:
BLOOM'S: Application
CUSTOM ID:
020.24 - SAE...

Question 12

The CPI is calculated

Accepted Answer

A)  monthly by the Department of Commerce.
B)  monthly by the Bureau of Labor Statistics.
C)  quarterly by the Department of Commerce.
D)  quarterly by the Bureau of Labor Statistics.E) B) and D)
F) A) and B)

Question 13

The introduction of the video cassette recorder in the 1970s exemplified a problem in measuring the cost of living; that problem is the problem of

Accepted Answer

A)  substitution bias.
B)  product-improvement bias.
C)  introduction of new goods.
D)  unmeasured quality change.E) C) and D)
F) A) and C)

Question 14

The CPI was 96 in 1982, and the CPI was 230 in 2012. How much money would you have needed in 2012 in order to buy what you could have bought with $500 in 1982?

Accepted Answer

A)  $208.96
B)  $1,197.92
C)  $697.92
D)  $1,697.92E) A) and D)
F) None of the above

Question 15

In the CPI, goods and services are weighted according to

Accepted Answer

A)  how long a market has existed for each good or service.
B)  the extent to which each good or service is regarded by the government as a necessity.
C)  how much consumers buy of each good or service.
D)  the number of firms that produce and sell each good or service.E) C) and D)
F) None of the above

Question 16

The CPI was 172 in 2007, and the CPI was 46.5 in 1982. If your parents put aside $1,000 for you in 1982, then how much would you have needed in 2007 in order to buy what you could have bought with the $1,000 in 1982?

Accepted Answer

A)  $270.35
B)  $1,255.00
C)  $2,698.92
D)  $3,698.92E) A) and B)
F) All of the above

Question 17

Table 24-9
The table below lists the per gallon prices of gas and milk for the months of April, May, and June. Assume that the typical consumer buys 60 gallons of gas and 4 gallons of milk each month, and that April is the base period. 
-Refer to Table 24-9. What is the consumer price index for May?

Accepted Answer

A)  60
B)  132
C)  166
D)  123E) A) and B)
F) B) and C)

Question 18

Scenario 24-5
TOPICS:
Price levels
Inflation
KEYWORDS:
BLOOM'S: Application
CUSTOM ID:
012.24 - SAE - MANK08
Scenario 24-6
A small economy produced and consumed goods X and Y in 2010 and 2011 in the amounts shown in the table below. Assume that the market basket for the CPI is defined in the base year. 
-Refer to Scenario 24-6. Using 2010 as the base year, what is the inflation rate in 2011?

Accepted Answer

The inflat...

Question 19

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 D)
F) B) and C)

Question 20

Which of the following statements best represents economists' beliefs about the bias in the CPI as a measure of the cost of living?

Accepted Answer

A)  Economists agree that the bias in the CPI is a very serious problem.
B)  Economists agree that the bias in the CPI is not a serious problem.
C)  Economists agree on the severity of the CPI bias, but there is still debate on what to do about it.
D)  There is still debate among economists on the severity of the CPI bias and what to do about it.E) None of the above
F) A) and D)

Exam 24: Measuring the Cost of Living

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

Which of the following is not an example of a price index computed by the Bureau of Labor Statistics?

Correct Answer
verified

Table 24-12. Will's expenditures on food for three consecutive years, along with other values, are presented in the table below. -Refer to Table 24-12. Suppose Will's 2009 food expenditures in 2011 dollars amount to $5,750. Then the inflation rate for 2011 is about

Correct Answer
verified
B

Table 24-9 The table below lists the per gallon prices of gas and milk for the months of April, May, and June. Assume that the typical consumer buys 60 gallons of gas and 4 gallons of milk each month, and that April is the base period. -Refer to Table 24-9. What is the inflation rate for May?

Correct Answer
verified

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

Correct Answer
verified

Janelle earned a salary of $40,000 in 1996 and $65,000 in 2006. The consumer price index was 160 in 1996 and 266 in 2006. Janelle's 2006 salary in 1996 dollars is

Correct Answer
verified
A

Suppose a basket of goods and services has been selected to calculate the consumer price index. In 2005, the basket of goods cost $108.00; in 2006, it cost $135.00; and in 2007, it cost $168.75. Which of the following statements is correct?

Correct Answer
verified

Correct Answer
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Babe Ruth, the famous baseball player, earned $80,000 in 1931. Today, the best baseball players can earn more than 400 times as much as Babe Ruth earned in 1931. However, prices have also risen since 1931. We can conclude that

Correct Answer
verified
D

Core CPI is a price index that only looks at the prices of food and energy and ignores the prices of all other goods and services.

Correct Answer
verified

Correct Answer
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The CPI is calculated

Correct Answer
verified

The introduction of the video cassette recorder in the 1970s exemplified a problem in measuring the cost of living; that problem is the problem of

Correct Answer
verified

The CPI was 96 in 1982, and the CPI was 230 in 2012. How much money would you have needed in 2012 in order to buy what you could have bought with $500 in 1982?

Correct Answer
verified

In the CPI, goods and services are weighted according to

Correct Answer
verified

The CPI was 172 in 2007, and the CPI was 46.5 in 1982. If your parents put aside $1,000 for you in 1982, then how much would you have needed in 2007 in order to buy what you could have bought with the $1,000 in 1982?

Correct Answer
verified

Table 24-9 The table below lists the per gallon prices of gas and milk for the months of April, May, and June. Assume that the typical consumer buys 60 gallons of gas and 4 gallons of milk each month, and that April is the base period. -Refer to Table 24-9. What is the consumer price index for May?

Correct Answer
verified

Correct Answer
verified
The inflat...
View Answer

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

Correct Answer
verified

Which of the following statements best represents economists' beliefs about the bias in the CPI as a measure of the cost of living?

Correct Answer
verified

Exam 24: Measuring the Cost of Living

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

Which of the following is not an example of a price index computed by the Bureau of Labor Statistics?

Correct AnswerverifiedShow Answer

Table 24-12. Will's expenditures on food for three consecutive years, along with other values, are presented in the table below. -Refer to Table 24-12. Suppose Will's 2009 food expenditures in 2011 dollars amount to $5,750. Then the inflation rate for 2011 is about

Correct AnswerverifiedB

Table 24-9 The table below lists the per gallon prices of gas and milk for the months of April, May, and June. Assume that the typical consumer buys 60 gallons of gas and 4 gallons of milk each month, and that April is the base period. -Refer to Table 24-9. What is the inflation rate for May?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Janelle earned a salary of $40,000 in 1996 and $65,000 in 2006. The consumer price index was 160 in 1996 and 266 in 2006. Janelle's 2006 salary in 1996 dollars is

Correct AnswerverifiedA

Suppose a basket of goods and services has been selected to calculate the consumer price index. In 2005, the basket of goods cost $108.00; in 2006, it cost $135.00; and in 2007, it cost $168.75. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Babe Ruth, the famous baseball player, earned $80,000 in 1931. Today, the best baseball players can earn more than 400 times as much as Babe Ruth earned in 1931. However, prices have also risen since 1931. We can conclude that

Correct AnswerverifiedD

Core CPI is a price index that only looks at the prices of food and energy and ignores the prices of all other goods and services.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The CPI is calculated

Correct AnswerverifiedShow Answer

The introduction of the video cassette recorder in the 1970s exemplified a problem in measuring the cost of living; that problem is the problem of

Correct AnswerverifiedShow Answer

The CPI was 96 in 1982, and the CPI was 230 in 2012. How much money would you have needed in 2012 in order to buy what you could have bought with $500 in 1982?

Correct AnswerverifiedShow Answer

In the CPI, goods and services are weighted according to

Correct AnswerverifiedShow Answer

The CPI was 172 in 2007, and the CPI was 46.5 in 1982. If your parents put aside $1,000 for you in 1982, then how much would you have needed in 2007 in order to buy what you could have bought with the $1,000 in 1982?

Correct AnswerverifiedShow Answer

Table 24-9 The table below lists the per gallon prices of gas and milk for the months of April, May, and June. Assume that the typical consumer buys 60 gallons of gas and 4 gallons of milk each month, and that April is the base period. -Refer to Table 24-9. What is the consumer price index for May?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe inflat...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following statements best represents economists' beliefs about the bias in the CPI as a measure of the cost of living?

Correct AnswerverifiedShow Answer

Correct Answer
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The U.S. i...
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B

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A

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D

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The inflat...
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