FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 24: Measuring the Cost of Living

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 31

Multiple Choice

Review LaterAdd Note

Review Later

Table 24-2 The following table pertains to Wiskancia, an economy in which the typical consumer's basket consists of 15 pounds of apples and 7 teddy bears. ​ ​ $\begin{array} { | c | c | c | } \hline \text { Year } & \begin{array} { c } \text { Price of Apples } \\\text { (Dollars per pound) }\end{array} & \begin{array} { c } \text { Price of Teddy bears } \\\text { (Dollars per toy) }\end{array} \\\hline 1 & 14 & 7 \\\hline 2 & 12 & 5 \\\hline 3 & 15 & 9 \\\hline\end{array}$ -Refer to Table 24-2. The inflation rate was

A) positive in Year 2 and positive in Year 3.
B) negative in Year 2 and negative in Year 3.
C) positive in Year 2 and negative in Year 3.
D) negative in Year 2 and positive in Year 3.

E) A) and B)
F) B) and C)

Correct Answer

verified

Show Answer

Question 32

Multiple Choice

Review LaterAdd Note

Review Later

If the nominal interest rate is 5 percent and the real interest rate is 7 percent, then the inflation rate is

A) −2 percent.
B) 0.4 percent.
C) 2 percent.
D) 12 percent.

E) All of the above
F) B) and C)

Correct Answer

verified

Show Answer

Question 33

Multiple Choice

Review LaterAdd Note

Table 24-3 The following table lists the per gallon prices of gas and milk for the months of September, October, and November. Assume that the typical consumer buys 30 gallons of gas and 15 gallons of milk each month, and that September is the base period. ​ ​ $\begin{array} { | c | c | c | } \hline \text { Month } & \begin{array} { c } \text { Price of Gas } \\\text { (Dollars per gallon) }\end{array} & \begin{array} { c } \text { Price of Milk } \\\text { (Dollars per gallon) }\end{array} \\\hline \text { September } & 3.50 & 3.50 \\\hline \text { October } & 3.85 & 3.52 \\\hline \text { November } & 4.25 & 3.58 \\\hline\end{array}$ -Refer to Table 24-3. What is the consumer price index for October?

Archie has a savings account at a bank. If he earns 6 percent interest on his account and if there is deflation, then his purchasing power rises by more than 6 percent over the course of a year.

Suppose the Tooth Fairy paid 50 cents for a tooth in 1970. The CPI in 1970 was 38.8, while the CPI in 2010 was 218.1. What is the value of the Tooth Fairy's payment in 2010 dollars?

The largest sector in the consumer price index market basket is food and beverage purchases.

The content of the basket of goods and services used to compute the CPI changes every month.

In 1931, President Herbert Hoover was paid a salary of $75,000. Government statistics show a consumer price index of 15.2 for 1931 and 237 for 2015. President Hoover's 1931 salary was equivalent to a 2015 salary of about

The Bureau of Labor Statistics determines which prices are most important to the typical consumer by surveying consumers.

Social Security payments are indexed for inflation using the CPI. A recent newspaper editorial claimed that Social Security recipients are harmed by years of low inflation because they do not receive as large an increase in their payments as they do in years of high inflation. Which of the following statements is correct?

If the nominal interest rate is 5 percent and the inflation rate is 2 percent, then the real interest rate is 7 percent.

If the consumer price index was 100 in the base year and 107 in the following year, then the inflation rate was

If the consumer price index was 93 in Year 1, 97 in Year 2, and 100 in Year 3, then the base year must be

Nate collected Social Security payments of $220 a month in Year 1. If the price index rose from 90 to 108 between Year 1 and Year 2, then his Social Security payments for Year 2 should have been

If the price index was 90 in Year 1, 100 in Year 2, and 95 in Year 3, then the economy experienced

The inflation rate is defined as the

Table 24-4 Lee's expenditures on food for three consecutive years, along with other values, are presented in the following table. ​ ​ -Refer to Table 24-4. To the nearest dollar, Lee's Year 2 food expenditures in Year 1 dollars amount to

If the nominal interest rates rises, then the inflation rate must have increased.

If the inflation rate decreased from 3.33% to 2.90% between October and November, while the nominal interest rate increased from 4.75% to 4.80%, what is the real interest rate in November?

The CPI differs from the GDP deflator in that