ASSESS Chapter 7 Quiz

In 2019 and in​ 2020, consumers in Dexter purchased only books and pens. The prices and quantities for 2019 and 2020 are listed in the table. The reference base period for​ Dexter's CPI is​ 2019, and 2019 is also the year of the Consumer Expenditure Survey. What is the inflation rate in​ 2020? The inflation rate in 2020 is​ _______ percent. A. −10.8 B. 74.0 C. −9.3 D.

-10.8

Suppose that nominal GDP is $14,478 billion and the GDP price index is 103.2. What is the value of real GDP​? The value of real GDP is _____ billion.

14,029

sWhat is in the CPI market​ basket? The CPI market basket consists of items that​ _______ buy and​ _______. A. urban​ households; the Consumer Expenditure Survey is used to update it frequently B. urban​ households; it is updated every month C. all​ households; the reference base period changes whenever the market basket changes D. all​ households; a greater weight is put on the items purchased by urban households

urban​ households; the Consumer Expenditure Survey is used to update it frequently

The reference base period for the CPI is​ 1982-1984. In January 2018​, the CPI was 247.9. What does this number tell​ us? This number tells us that the​ _______ of the prices paid by urban consumers for a fixed basket of consumer goods and services was​ _______. A. ​average; 147.9 percent higher in January 2018 than the average of​ 1982-1984 B. ​average; 247.9 percent higher in January 2018 than the average of​ 1982-1984 C. inflation​ rate; 147.9 percent per year D. inflation​ rate; 47.9 percent per year

average; 147.9 percent higher in January 2018 than the average of​ 1982-1984

What is the value of the CPI in the base​ period? The value of the CPI in the base period​ _______. A. is relevant only if the base period is within the last 10 years B. changes when the reference base period changes C. is 100 no matter what reference base period is chosen D. can be greater​ than, equal​ to, or less than 100

is 100 no matter what reference base period is chosen

Which of the following statements about the CPI is​ true? How does the PCEPI differ from the​ CPI? The CPI​ _______. A. measures all the changes in the cost of living B. is a measure of the change in the amount of money that people need to spend to achieve a given standard of living C. has a bias of approximately 2.0 percentage points a year D. is a relatively useless measure because every year new goods become available and some old goods disappear The PCEPI​ _______. A. uses the same market basket as the CPI but gives a greater weight to​ sticky-price items B. excludes the prices of food and energy C. uses the prices of goods and services included in the consumption expenditure component of GDP D. introduces even more biases into the inflation rate than the CPI

is a measure of the change in the amount of money that people need to spend to achieve a given standard of living; uses the prices of goods and services included in the consumption expenditure component of GDP

Which of the following statements is true if the CPI rises from 120 to​ 126? If the CPI rises from 120 to​ 126, then​ _______. A. the price of food rises by 5 percent B. the price of housing rises by at least 6 percent C. on average, the price paid by urban consumers for a fixed basket of consumer goods and services rises by 6 percent D. on​ average, the price paid by urban consumers for a fixed basket of consumer goods and services rises by 5 percent

on​ average, the price paid by urban consumers for a fixed basket of consumer goods and services rises by 5 percent

The table shows the quantities in the CPI basket and the prices in​ 2018, 2019, and 2020. The reference base year is 2018. Calculate the cost of the CPI basket in 2019 prices and the cost of the CPI basket in 2020 prices. Calculate the CPI in 2019 and in 2020. Calculate the inflation rate in 2020. The cost of the CPI basket in 2019 prices is ​$_____ and the cost of the CPI basket in 2020 prices is ​$_____. ​>>> Answer to 2 decimal places. The CPI in 2019 is _____ and the CPI in 2020 is _____. ​>>> Answer to 1 decimal place. The inflation rate in 2020 is negative _____ percent.

15.5, 12.75 144.2, 118.6 -17.8

The real wage rate is ​$15.00 an hour and the CPI is 110. What is the nominal wage​ rate? The nominal wage rate is ​$_____ an hour.

16.50

In 2019 and in​ 2020, consumers in Dexter purchased only books and pens. The prices and quantities for 2019 and 2020 are listed in the table. The reference base period for​ Dexter's CPI is 2019 and 2019 is also the year of the Consumer Expenditure Survey. Calculate the CPI in 2020. The CPI in 2020 is​ _______. A. 57.0 B. 35.1 C. 100.0 D. 285.0

285.0

You deposit​ $200 in a savings account on January​ 1, and the bank pays you interest of​ $10 at the end of the year. During the​ year, the average price level rises by 2 percent. What is the real interest rate on your savings​ account? The real interest rate on your savings account is​ _______. A. 3 percent a year Your answer is correct. B. 6 percent a year C. 2 percent a year D. $6

3 percent a year

Choose the statement that is correct. A. A 1996 Congressional Advisory Commission reports that the CPI overstates inflation by 1.1 percent a year B. The main source of bias in the CPI arises from frequently updating the CPI market basket. Your answer is not correct. C. The bias in the CPI gives workers with wage contracts linked to the CPI less real income than the firm intended. D. The bias in the CPI decreases government outlays.

A 1996 Congressional Advisory Commission reports that the CPI overstates inflation by 1.1 percent a year