Module 11 & 12
Price stability occurred in January 2018.
False
Suppose the price index for January 2017 equals 242.839 and the price index for January 2018 equals 247.867, then the inflation rate for January 2018 would equal 3.07%.
False
The Consumer Price Index (CPI) is used to measure changes in prices of goods and services purchased by producers in the economy.
False
The Core Consumer Price Index (CPI) is used to measure the cost of a hypothetical market basket of goods and services purchased by consumers in the economy.
False
The inflation rate refers to a single number representing the overall level of prices in the economy.
False
The nominal wage rate such as the federal minimum wage rate of $7.25 per hour is adjusted for inflation.
False
In order to calculate the real wage rate, you divide the price level by the wage rate.
False
Deflation refers to the process of bringing down the inflation rate.
False
Let's suppose you are looking to finance a new car and based on your credit score you qualify for an annual interest rate of 2.58% on a 5-year car loan. If the current annual rate of inflation is 2.1%, what is the real interest rate equal to? 0.58% 2.48% 0.48% 4.68%
I can tell you it is not 2.48
From 1914 to 2018, the highest inflation rate was? From 1914 to 2018, the highest inflation rate was? 34.12% 17.44% 23.67% None of the above
I can tell you its not 17.44%
From 1914 to 2018, deflation was worst during what month and year? From 1914 to 2018, deflation was worst during what month and year? July 2009 October 1938 March 1933 June 1921
June 1921
Which of the following correctly explains menu costs? Which of the following correctly explains menu costs? Increased transaction costs caused by inflation. The real costs associated with changing listed prices of goods and services. A cost associated with inflation that makes money a less reliable unit of measurement. None of the above.
The real costs associated with changing listed prices of goods and services.
An example of shoe leather costs would be driving to the grocery store to stock up on goods in anticipation of inflation.
True
High rates of inflation impose significant economic costs.
True
If the current inflation rate is higher than expected, borrowers will gain at the expense of lenders.
True
If the nominal interest rate on a 30-year fixed rate mortgage is equal to 3.99% and the inflation rate is equal to 2.1%, then the real interest rate must be equal to 1.89%.
True
Indexing a social security payment to the Consumer Price Index (CPI) means to increase or decrease that payment with inflation or deflation.
True
Tax payments through tax brackets are indexed to the Consumer Price Index (CPI).
True
The formula for the GDP Deflator is Nominal GDP/Real GDP × 100.
True
There was deflation in the economy in September 2015.
True
