Chapter 11 Measuring the cost of living

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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.


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