Econ 201 chapter 11
If the nominal interest rate is 8 percent and the rate of inflation is 3 percent, then the real interest rate is
5%
if the CPI was 100 in the base year and 107 in the following year, then the inflation rate was
7%
the CPI is calculated
Monthly
which of the following is correct
The CPI is better than the GDP deflator at reflecting the goods and services bought by consumers
which of the following is not correct
The consumer price index is used to measure the quantity of goods and services that the economy is producing.
an increase in the price of dairy products produced domestically will be reflected in
both the GDP deflator and the CPI
the producer price index measures the cost of a basket of goods and services
bought by firms
the inflation rate is calculated
by determining the percentage change in the price index from the preceding period
the introduction of a new good
decreases the cost of maintaining the same level of economic well-being
When the consumer price index rises, the typical family
has to spend more dollars to maintain the same standard of living
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
in the CPI, goods and services are weighed according to
how much consumers buy of each good or service
most, but not all, athletic apparel sold in the united states is imported from other nations. if the price of athletic apparel increases the GDP deflator will
increase less than the CPI
the CPI differes from the GDP deflator in that
increases in the prices of foreign produced goods that are sold to US consumers show up in CPI but not the GDP deflator
to which of the problems in the construction of the CPI is the creation of the mobile phone most relevant
introduction of a new good
the consumer price index is used to
monitor changes in the cost of living over time
the economies inflation rate is the
percentage change in the price level from the previous period
Changes in the producer price index are often thought to be useful in predicting changes in
the CPI
a COLA automatically raises the wage when
the CPI increases
which of the following agencies calculates the CPI
the bureau of labor statistics
Economists use the term inflation to describe a situation in which
the economies overall price level is rising
What basket of goods and services is used to construct the CPI?
the goods and services that are typically bought by consumers as determined by government surveys
in computing the CPI, a base year is chosen. which of the following statements about the base year is correct
the value of the CPI is always 100 in the base year
For some racquet sports, there have been increases in the size of the racquets; also, the methods and materials used for making racquets have improved. To which problem in the construction of the CPI is this situation most relevant?
unmeasured quality change