quizzes

In 1931, President Herbert Hoover was paid a salary of $75,000. Government statistics show a consumer price index of 15.2 for 1931 and 229.6 for 2012. President Hoover's 1931 salary was equivalent to a 2012 salary of about ... A) $4,965. B) $1,132,895. C) $1,057,894. D) $16,080,001.

$1,132,895.

If the CPI was 95 in 1955 and is 475 today, then $100 today purchases the same amount of goods and services as ... A) $4.75 purchased in 1955. B) $20.00 purchased in 1955. C) $95.00 purchased in 1955. D) $500 purchased in 1955.

$20.00 purchased in 1955.

Refer to Table 5. Assume the market basket has three products - bananas, cookies, and wine - with the values in 2013 and 2018 for price and quantity given in the table above. If 2013 is the base year, the consumer price index for 2018 equals ... A) 75. B) 93. C) 108. D) 121.

121.

Refer to Table 4. Suppose an economy has only three goods and the typical family purchases the amounts given in the table above. If 2005 is the base year, then what is the CPI for 2013? A) 40.08 B) 100 C) 180 D) 208

208

The consumer price index was 120 in 2013 and 126 in 2014. The nominal interest rate during this period was 8 percent. What was the real interest rate during this period? A) 3 percent B) 2 percent C) 3.3 percent D) 12.8 percent

3 percent

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? 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 Mexico

3.3 percent for Canada and 9.1 percent for Mexico

If the CPI was 125 this year and 120 last year, then ... A) the cost of the CPI basket of goods and services increased by 4.2 percent this year. B) the price level increased by 4.2 percent this year. C) the inflation rate for this year was 4.2 percent. D) All of the above are correct.

All of the above are correct.

Which of the following statements is correct? A) The percentage change in the CPI is a measure of the inflation rate, but the percentage change in the GDP deflator is not a measure of the inflation rate. B) Compared to the CPI, the GDP deflator is the more common gauge of inflation. C) The GDP deflator better reflects the goods and services bought by consumers than does the CPI. D) The CPI can be used to compare dollar figures from different points in time.

The CPI can be used to compare dollar figures from different points in time.

Which of the following is not correct? A) The CPI is used to measure the quantity of goods and services that the economy is producing. B) The CPI is used by economists to measure the inflation rate. C) The CPI is used to monitor changes in the cost of living over time. D) The CPI gives economists a way of turning dollar figures into meaningful measures of purchasing power.

The CPI is used to measure the quantity of goods and services that the economy is producing.

The consumer price index (CPI) and the GDP deflator are two alternative measures of the overall price level. Which of the following statements about the two measures is correct? A) The CPI involves a base year; the GDP deflator does not involve a base year. B) The CPI can be used to compute the inflation rate; the GDP deflator cannot be used to compute the inflation rate. C) The CPI reflects current production of goods and services; the GDP deflator reflects a fixed basket of goods and services. D) The CPI reflects the prices of goods and services bought by consumers; the GDP deflator reflects the prices of goods and services produced domestically.

The CPI reflects the prices of goods and services bought by consumers; the GDP deflator reflects the prices of goods and services produced domestically.

In computing the consumer price index, a base year is chosen. Which of the following statements about the base year is correct? A) Thebaseyearisalwaysthefirstyearamongtheyearsforwhichcomputationsarebeing made. B) It is necessary to designate a base year only in the simplest case of two goods; in more realistic cases, it is not necessary to designate a base year. C) The value of the consumer price index is always 100 in the base year. D) The base year is always the year in which the cost of the basket was highest among the years for which computations are being made.

The value of the consumer price index is always 100 in the base year.

The nominal interest rate tells you ... A) the number of dollars in your bank account today B) the purchasing power of your bank account today. C) how fast the number of dollars in your bank account rises over time. D) how fast the purchasing power of your bank account rises over time.

how fast the number of dollars in your bank account rises over time.

An increase in the price of imported coffee shows up ... A) in the consumer price index and in the GDP deflator. B) in the consumer price index, but not in the GDP deflator. C) in the GDP deflator, but not in the consumer price index. D) in neither the consumer price index nor in the GDP deflator.

in the consumer price index, but not in the GDP deflator.

Consider a small economy in which consumers buy only two goods: apples and pears. In order to compute the consumer price index for this economy for two or more consecutive years, we assume that ... A) the number of apples bought by the typical consumer is equal to the number of pears bought by the typical consumer in each year. B) neither the number of apples nor the number of pears bought by the typical consumer changes from year to year. C) the percentage change in the price of apples is equal to the percentage change in the price of pears from year to year. D) neither the price of apples nor the price of pears changes from year to year.

neither the number of apples nor the number of pears bought by the typical consumer

Which of the following is not a widely acknowledged problem with using the CPI as a measure of the cost of living? A) substitution bias B) introduction of new goods C) unmeasured price change D) unmeasured quality change

unmeasured price change