Quiz 4

the CPI excluding only food and energy.

Core CPI is-

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

Every unit of good x that is produced in the United States is exported to other countries. An increase in the price of good x shows up

$20.00 purchased in 1955.

If the CPI was 95 in 1955 and is 475 today, then $100 today purchases the same amount of goods and services as-

Both are indexed.

Of Social Security benefits and federal income tax brackets, which is indexed?

The quality of televisions improves and televisions become more expensive relative to other goods.

Suppose the quality of televisions changes over time, but the quality change goes unmeasured for the purpose of computing the consumer price index. In which of the following instances would the was resulting from the unmeasured quality change be most severe?

the CPI better reflects the goods and services bought by consumers.

The CPI is more commonly used as a gauge of inflation than the GDP deflator is because,

the law of demand applies to most, if not all, goods.

The consumer price index is subject to substitution bias because

introduction of new goods.

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

5.0 percent.

The price index was 120 in 2012 and 126 in 2013. What was the inflation rate?

allow for the comparison of dollar figures from different points in time.

The primary purpose of measuring the overall level of prices in the economy is to

the overall level of prices in the economy is increasing.

The term inflation is used to describe a situation in which...

the goods and services that are typically bought by consumers as determined by government surveys.

What basket of goods and services is used to construct the CPI?

the prices of the goods and services.

When computing the cost of the basket of goods and services purchased by a typical consumer, which of the following changes from year to year?

consumer prices were always rising in the time frame represented on the graph.

When looking at a graph of nominal and real interest rates you notice that nominal rates always lie above the real rates. From this you conclude-

can spend fewer dollars to maintain the same standard of living.

When the consumer price index falls, the typical family...