Chapter 11 Measuring the cost of living
For purposes of calculating the CPI, the housing category of consumer spending includes the cost of
All of the above are correct
when box office receipts are not corrected for inflation, the most popular movie of all time is
Avatar
The steps involved in calculating the consumer price index and the inflation rate, in order are as follows:
Fix the basket, find the prices, compute the basket's cost, choose a base year and compute the index, and compute the inflation rate
CPI is calculated
Monthly
The economy's inflation rate is the
Percentage change in the price level from the previous period
One differences between the GDP deflator and the consumer price index is
The GDP defoliator reflects prices for all goods and services produced domestically and the consumer price index reflects prices for some goods and services bought by consumers.
which of the following agencies calculates the CPI
The bureau of labor statistics
The consumer price index is
a useful measure, but not a perfect measure, of the cost of living
The primary purpose of measuring the overall level of prices in the economy is to
allow for the comparison of dollar figure from different points in time
The producer price index measures the cost of a basket goods and services
bought by firms
The producer price index measures the cost of a basket of goods and services
bought by firms
the inflation rate is calculated
by determine the percentage change in the price index from the preceding period
The goal of the consumer price index is to measure changes in the
cost of living
the GDP Deflator reflects the
current level of prices relative to the level of prices on the base year.
the nominal interest rate tells you
how fast the number of dollars in your bank account rises over time.
The real interest rate tells you
how fast the purchasing power of your bank account rises over time
the consumer price index is used to
monitor changes in the cost of living over time
Price changes from year to year are not proportional, and consumers respond to these changes by altering their spending patterns. The problem this creates for inflation calculations is called
substitution bias
A COLA automatically raises the wage when
the consumer price index increases
for purposes of calculating the CPI, the food and beverages category of consumer spending includes the cost
both food away from home and alcoholic beverages
Which is the most accurate statement about the GDP deflator and the consumer price index?
The consumer price index compares the price of fixed basket of goods and services to the price of the basket in the base year, whereas the GDP deflator compares the price of currently produced goods and services to the price of the same goods and services in base year.
When box office receipts are corrected for inflation, the most popular movie of all time is
gone with the wind
When the consumer price index rises, the typical family
has to spend more dollars to maintain the same standard of living
one of the differences between the GDP deflator and the consumer price index is
the GDP deflator reflect prices for all goods and services produced domestically and the consumer price index reflects prices for some goods and services bought by consumers.
Changes in the producer price index are often thought to be useful in predicting changes in
the consumer price index
which entity within the U.D government is responsible for computing and reporting the CPI?
the department of labour
The CPI is a measure of the overall cost
the goods and services purchased by a typical consumer
which of the following statements is correct about the relationship between the nominal interest rate and the real interest rate?
the real interest rate is the nominal interest rate minus the rate of inflation.
The consumer price index is used to
turn dollar figures into meaningful measures of purchasing power
Indexation refers to
using a law or contract to automatically correct a dollar amount for the effects of inflation.