GAP 2

The CPI was 100 in 2003, 105 in 2004, and 130 in 2005.

Assume an economy experienced a positive rate of inflation between 2003 and 2004 and again between 2004 and 2005. However, the inflation rate was higher between 2004 and 2005 than it was between 2003 and 2004. Which of the following scenarios is consistent with this assumption?

$0.30.

Consternation Corporation has an agreement with its workers to index completely the wage of its employees using the CPI. Consternation Corporation currently pays its production line workers $7.50 an hour and is scheduled to index their wages today. If the CPI is currently 130 and was 125 a year ago, the firm should increase the hourly wages of its workers by

4.6 percent.

For an imaginary economy, the value of the consumer price index was 140 in 2013 and 146.5 in 2014. The economy's inflation rate for 2014 was

household furnishings and operation. shelter. fuel and other utilities. D. All of the above are correct.

For purposes of calculating the CPI, the housing category of consumer spending includes the cost of

-4 percent.

If the nominal interest rate is 6 percent and the rate of inflation is 10 percent, then the real interest rate is

FALSE

In a period of inflation real interest rates will be greater than nominal interest rates.

consumer price index rises much more than does the GDP deflator.

In the United States, if the price of imported oil rises so that the prices of gasoline and heating oil rise, then the

high in the 1970s and low in the 1990s.

In the United States, nominal interest rates were

True

Kristine has a savings account at a bank. If the nominal interest rate she earns exceeds the rate of inflation, then her purchasing power increases over time.

T

Persistent increases in the overall level of prices have been the norm.

9.52 percent.

Suppose Will's 2009 food expenditures in 2011 dollars amount to $5,750. Then the inflation rate for 2011 is about

the dollar value of savings increased at 5.6 percent, and the purchasing power of savings increased at 3 percent.

Suppose that over the past year, the real interest rate was 3 percent, the CPI was 126.2 at the beginning of the year, and the CPI was 129.5 at the end of the year. It follows that

242.65

Suppose the consumer price index for 2013 is not necessarily 235. If the nominal interest rate for 2013 is 7.3 percent , then the consumer price index for 2013 is, in fact,

122.9

Suppose the typical household spends $3,500 on goods and services during the month of January, and $4,300 on the same goods and services in February. Using January as the base period, what is the consumer price index for February?

x/+

Suppose you know the value of the consumer price index (CPI) in year 2 as well as the inflation rate in year 2. Which of the following equations is valid for the CPI in year 1?

$130

Table 24-5 The table below pertains to Wrexington, an economy in which the typical consumer's basket consists of 20 pounds of meat and 10 toys. Refer to Table 24-5. The cost of the basket in 2006 was

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

cost of living.

The goal of the consumer price index is to measure changes in the

decreases the cost of maintaining the same level of economic well-being.

The introduction of a new good

4.41 percent

The price index was 136 in one year and 142 in the next year. What was the inflation rate between the two years?