Econ chapter 6
Estimates of the overstatement of cost of living by the CPI suggest the magnitude of the overstatement is roughly
1.0 percentage points
If a market basket was defined in 2018 and it cost $10,000 to purchase the items in that basket in 2018, while it cost $11,000 to purchase those identical goods in 2019, then the price index for the base year is
100
Using Table 6.1, from the 1982-1984 base to 2004, prices increased CPI 1982-1984=100
90.3%.
Which of the following can make the unemployment rate fall?
A decrease in the number of people who are looking for work and an increase in the number of people with jobs.
Which of the following can make the unemployment rate rise?
An increase in the number of people who are looking for work and a decrease in the number of people with jobs
A reason why the CPI overstates the cost of living is that the
BLS audits prices in the same types of stores, rather than shift to cheaper outlets
The expenditures approach to GDP equals
Consumption + Gross Investment + Government Purchases + Net Exports
An educated guess at what the price of some good might be, based upon its characteristics, is called
a hedonic price
If the price of gasoline has increased from $3 per gallon to $4 per gallon at the same time that the overall price index increased from 200 to 300, then you know that the inflation adjusted price of gasoline has
decreased
Which of these would economists consider the worst?
depression
If the unemployment rate falls because the number of people not working but searching for work falls, economists would attribute this to the
discouraged worker effect
One of the reasons that Real Gross Domestic Product is not synonymous with social welfare is
environmental quality is ignored
During the period from 2000 to today the Labor Force Participation Rate
fell
If the price of gasoline has increased from $3 per gallon to $4 per gallon at the same time that the overall price index increased from 200 to 250, then you know that the inflation adjusted price of gasoline has
increased
One subject of study for macroeconomics is
inflation
One problem with using Real Gross Domestic Product as a measure of social welfare is that
it fails to count home production
If the inflation rate turns out to be less than was is expected to be, the clear winners are
lenders
A reason why the CPI overstates the cost of living is it
makes no attempt to control for the fact that sales often occur on holidays.
According to the Bureau of Labor Statistics, the Consumer Price Index was
never intended to measure increases in the cost of living, but many use it that way.
A CPI miscalculation that overstates its increase by 0.8 percentage points will cause
tax brackets cutoffs to rise too quickly.
The consumer price index is computed by
the Bureau of Labor Statistics.
There were large decreases in productivity during
the late 1970s and the 2010s.
One of the reasons that Real Gross Domestic Product is not synonymous with social welfare is
the underground economy (unreported and illegal income and sales) is not counted
Traditionally, a recession defined by declining Real GDP lasts over a period of at least
two consecutive calendar quarters
If a person is unemployed because their industry has moved to another country, economists refer to the person as
structurally unemployed
If a market basket was defined in 2018 and it cost $10,000 to purchase the items in that basket in 2018, while it cost $11,000 to purchase those identical goods in 2019, then the inflation rate from 2018 to 2019 is
(110-100)/100*100%=10%.
If a market basket was defined in 2018 and it cost $10,000 to purchase the items in that basket in 2018, while it cost $11,000 to purchase those identical goods in 2019, then the price index for 2019 is
(11000/10000)*100=110
A 15-year old that wants a job but can't find one is
not included at all in the unemployment rate
The adjustments made recently by the BLS to mitigate the overstatement of the cost-of-living by the CPI
reduced the estimated overstatement from 1.1% to .8%.
