Question 1

Scenario 24-6
A small economy produced and consumed goods X and Y in 2010 and 2011 in the amounts shown in the table below. Assume that the market basket for the CPI is defined in the base year.
 
-Refer to Scenario 24-6. Using 2010 as the base year, what is the CPI in each year?

Accepted Answer

The CPI is...

Question 2

Suppose a basket of goods and services has been selected to calculate the CPI and 2009 has been selected as the base year. In 2007, the basket's cost was $64; in 2009, the basket's cost was $68; and in 2011, the basket's cost was $70. The value of the CPI in 2011 was

Accepted Answer

A)   97.14.
B)   100.10.
C)   102.94.
D)   109.38.E) A) and B)
F) A) and C) C

Question 3

Iggie took a university teaching job as an assistant professor in 1980 at a salary of $15,000. By 2011, she had been promoted to full professor, with a salary of $70,000. If the price index was 82 in 1980 and 225 in 2011, then what is Iggie's 2011 salary in 1980 dollars?

Accepted Answer

A)   $25,511
B)   $52,073
C)   $40,140
D)   $41,159E) All of the above
F) A) and B)

Question 4

Elizabeth just received her Ph.D. in economics and has two competing job offers. The first is in Washington, D.C. and pays a salary of $200,000. She has a similar job offer in Austin, TX that pays $90,000. Which pair of CPIs would make the two salaries have the same purchasing power?

Accepted Answer

A)   70 in Washington, D.C. and 42 in Austin, TX
B)   140 in Washington, D.C. and 70 in Austin, TX
C)   160 in Washington, D.C. and 72 in Austin, TX
D)   210 in Washington, D.C. and 150 in Austin, TXE) All of the above
F) A) and D)

Question 5

Suppose the price of a quart of milk rises from $1.00 to $1.20 and the price of a T-shirt rises from $8.00 to $9.60. If the CPI rises from 150 to 195, then people likely will buy

Accepted Answer

A)   more milk and more T-shirts.
B)   more milk and fewer T-shirts.
C)   less milk and more T-shirts.
D)   less milk and fewer T-shirts.E) All of the above
F) A) and B)

Question 6

When constructing the consumer price index, the Bureau of Labor Statistics does not do which of the following?

Accepted Answer

A)   Try to include all the goods and services that the typical consumer buys.
B)   Try to weight the goods and services that the typical consumer buys according to how much consumers buy of each item.
C)   Survey consumers to determine what the typical consumer buys.
D)   Survey sellers to determine what the typical consumer buys.E) B) and D)
F) A) and B)

Question 7

If the quality of a good deteriorates while its price remains the same, then the value of a dollar

Accepted Answer

A)   rises and the cost of living increases.
B)   rises and the cost of living decreases.
C)   falls and the cost of living increases.
D)   falls and the cost of living decreases.E) B) and C)
F) A) and B)

Question 8

If the CPI was 104 in 1967 and is 390 today, then $10 in 1967 purchased the same amount of goods and services as

Accepted Answer

A)   $2.67 purchases today.
B)   $37.50 purchases today.
C)   $39.00 purchases today.
D)   $104.00 purchases today.E) A) and C)
F) B) and C)

Question 9

Table 24-10
The table below shows the prices of baseballs and baseball bats for three years. Assume the typical consumer's basket consists of 6 baseballs and 2 baseball bats.
 
-Refer to Table 24-10. How much was the cost of the basket in 2008?

Accepted Answer

A)   $78.25
B)   $84.75
C)   $169.50
D)   $456.50E) A) and B)
F) All of the above

Question 10

When we express Babe Ruth's 1931 salary in today's dollars and compare his salary to those of current New York Yankee players, we find that the current median salary of today's Yankees is

Accepted Answer

A)   about three quarters of Ruth's salary.
B)   about the same as Ruth's salary.
C)   about twice Ruth's salary.
D)   more than four times Ruth's salary.E) A) and B)
F) All of the above

Question 11

If you currently make $25,000 a year and the CPI rises from 110 today to 150 in five years, then you need to be making $43,333.33 in five years to have kept pace with consumer price inflation.

Accepted Answer

A) True 
 B)False

Question 12

In an imaginary economy, consumers buy only sandwiches and magazines. The fixed basket consists of 20 sandwiches and 30 magazines. In 2006, a sandwich cost $4 and a magazine cost $2. In 2007, a sandwich cost $5. The base year is 2006. If the inflation rate in 2007 was 16 percent, then how much did a magazine cost in 2007?

Accepted Answer

A)   $1.87
B)   $2.08
C)   $2.32
D)   $3.00E) B) and C)
F) A) and D)

Question 13

Arlo is offered a job in Des Moines, where the CPI is 80, and a job in New York, where the CPI is 125. Arlo's job offer in Des Moines is for $42,000. How much does the New York job have to pay in order for the two salaries to represent the same purchasing power?

Accepted Answer

A)   $42,000
B)   $65,625
C)   $68,880
D)   $189,000E) None of the above
F) A) and C) B

Question 14

Which of the following changes in the price index produces the greatest rate of inflation: 100 to 110, 150 to 165, or 180 to 198?

Accepted Answer

A)   100 to 110
B)   150 to 165
C)   180 to 198
D)   All of these changes produce the same rate of inflation.E) B) and C)
F) C) and D)

Question 15

A dollar figure from 1908 is converted into 2008 dollars by dividing the 2008 price level by the 1908 price level, then multiplying by the 1908 dollar figure.

Accepted Answer

A) True 
 B)False

Question 16

Suppose that over the past year, the real interest rate was 6 percent and the inflation rate was 4 percent. It follows that

Accepted Answer

A)   the dollar value of savings increased at 6 percent, and the purchasing power of savings increased at 2 percent.
B)   the dollar value of savings increased at 6 percent, and the purchasing power of savings increased at 10 percent.
C)   the dollar value of savings increased at 10 percent, and the purchasing power of savings increased at 2 percent.
D)   the dollar value of savings increased at 10 percent, and the purchasing power of savings increased at 6 percent.E) None of the above
F) A) and D)

Question 17

In a particular economy, the price index was 120 in 2012 and 130 in 2013. Which of the following statements is correct?

Accepted Answer

A)   The economy experienced a rising price level between 2012 and 2013.
B)   The economy experienced a higher inflation rate between 2012 and 2013 than it had experienced between 2011 and 2012.
C)   The inflation rate between 2012 and 2013 was 10 percent.
D)   The base year is 2011.E) B) and C)
F) All of the above

Question 18

Scenario 24-4
Quinn has job offers in Wrexington and across the country in Charlieville. The Wrexington job would pay a salary of $50,000 per year, and the Charlieville job would pay a salary of $40,000 per year. The CPI in Wrexington is 150, and the CPI in Charlieville is 90.
-Refer to Scenario 24-4. The Charlieville salary in Wrexington dollars is

Accepted Answer

A)   $24,000.00.
B)   $26,666.67.
C)   $60,000.00
D)   $66,666.67.E) None of the above
F) B) and C) D

Question 19

Scenario 24-1
The price tag on a tennis ball in 1975 read $0.10, and the price tag on a tennis ball in 2005 read $1.00. The CPI in 1975 was 52.3, and the CPI in 2005 was 191.3.
-Refer to Scenario 24-1. In 1975 dollars, a 1975 tennis ball cost $0.10 and a 2005 tennis ball cost

Accepted Answer

A)   $0.27, so tennis balls were cheaper in 1975.
B)   $0.27, so tennis balls were cheaper in 2005.
C)   $3.66, so tennis balls were cheaper in 1975.
D)   $3.66, so tennis balls were cheaper in 2005.E) A) and D)
F) C) and D)

Question 20

The GDP deflator reflects the

Accepted Answer

A)   level of prices in the base year relative to the current level of prices.
B)   current level of prices relative to the level of prices in the base year.
C)   level of real output in the base year relative to the current level of real output.
D)   current level of real output relative to the level of real output in the base year.E) C) and D)
F) A) and B)

Exam 11: Measuring the Cost of Living

Scenario 24-6 A small economy produced and consumed goods X and Y in 2010 and 2011 in the amounts shown in the table below. Assume that the market basket for the CPI is defined in the base year. -Refer to Scenario 24-6. Using 2010 as the base year, what is the CPI in each year?

Correct Answer
verified
The CPI is...
View Answer

Suppose a basket of goods and services has been selected to calculate the CPI and 2009 has been selected as the base year. In 2007, the basket's cost was $64; in 2009, the basket's cost was $68; and in 2011, the basket's cost was $70. The value of the CPI in 2011 was

Correct Answer
verified
C

Iggie took a university teaching job as an assistant professor in 1980 at a salary of $15,000. By 2011, she had been promoted to full professor, with a salary of $70,000. If the price index was 82 in 1980 and 225 in 2011, then what is Iggie's 2011 salary in 1980 dollars?

Correct Answer
verified

Elizabeth just received her Ph.D. in economics and has two competing job offers. The first is in Washington, D.C. and pays a salary of $200,000. She has a similar job offer in Austin, TX that pays $90,000. Which pair of CPIs would make the two salaries have the same purchasing power?

Correct Answer
verified

Suppose the price of a quart of milk rises from $1.00 to $1.20 and the price of a T-shirt rises from $8.00 to $9.60. If the CPI rises from 150 to 195, then people likely will buy

Correct Answer
verified

When constructing the consumer price index, the Bureau of Labor Statistics does not do which of the following?

Correct Answer
verified

If the quality of a good deteriorates while its price remains the same, then the value of a dollar

Correct Answer
verified

If the CPI was 104 in 1967 and is 390 today, then $10 in 1967 purchased the same amount of goods and services as

Correct Answer
verified

Table 24-10 The table below shows the prices of baseballs and baseball bats for three years. Assume the typical consumer's basket consists of 6 baseballs and 2 baseball bats. -Refer to Table 24-10. How much was the cost of the basket in 2008?

Correct Answer
verified

When we express Babe Ruth's 1931 salary in today's dollars and compare his salary to those of current New York Yankee players, we find that the current median salary of today's Yankees is

Correct Answer
verified

If you currently make $25,000 a year and the CPI rises from 110 today to 150 in five years, then you need to be making $43,333.33 in five years to have kept pace with consumer price inflation.

Correct Answer
verified

Correct Answer
verified

Arlo is offered a job in Des Moines, where the CPI is 80, and a job in New York, where the CPI is 125. Arlo's job offer in Des Moines is for $42,000. How much does the New York job have to pay in order for the two salaries to represent the same purchasing power?

Correct Answer
verified
B

Which of the following changes in the price index produces the greatest rate of inflation: 100 to 110, 150 to 165, or 180 to 198?

Correct Answer
verified

A dollar figure from 1908 is converted into 2008 dollars by dividing the 2008 price level by the 1908 price level, then multiplying by the 1908 dollar figure.

Correct Answer
verified

Suppose that over the past year, the real interest rate was 6 percent and the inflation rate was 4 percent. It follows that

Correct Answer
verified

In a particular economy, the price index was 120 in 2012 and 130 in 2013. Which of the following statements is correct?

Correct Answer
verified

Correct Answer
verified
D

Scenario 24-1 The price tag on a tennis ball in 1975 read $0.10, and the price tag on a tennis ball in 2005 read $1.00. The CPI in 1975 was 52.3, and the CPI in 2005 was 191.3. -Refer to Scenario 24-1. In 1975 dollars, a 1975 tennis ball cost $0.10 and a 2005 tennis ball cost

Correct Answer
verified

The GDP deflator reflects the

Correct Answer
verified

Exam 11: Measuring the Cost of Living

Scenario 24-6 A small economy produced and consumed goods X and Y in 2010 and 2011 in the amounts shown in the table below. Assume that the market basket for the CPI is defined in the base year. -Refer to Scenario 24-6. Using 2010 as the base year, what is the CPI in each year?

Correct AnswerverifiedThe CPI is...View AnswerShow Answer

Suppose a basket of goods and services has been selected to calculate the CPI and 2009 has been selected as the base year. In 2007, the basket's cost was $64; in 2009, the basket's cost was $68; and in 2011, the basket's cost was $70. The value of the CPI in 2011 was

Correct AnswerverifiedC

Iggie took a university teaching job as an assistant professor in 1980 at a salary of $15,000. By 2011, she had been promoted to full professor, with a salary of $70,000. If the price index was 82 in 1980 and 225 in 2011, then what is Iggie's 2011 salary in 1980 dollars?

Correct AnswerverifiedShow Answer

Elizabeth just received her Ph.D. in economics and has two competing job offers. The first is in Washington, D.C. and pays a salary of $200,000. She has a similar job offer in Austin, TX that pays $90,000. Which pair of CPIs would make the two salaries have the same purchasing power?

Correct AnswerverifiedShow Answer

Suppose the price of a quart of milk rises from $1.00 to $1.20 and the price of a T-shirt rises from $8.00 to $9.60. If the CPI rises from 150 to 195, then people likely will buy

Correct AnswerverifiedShow Answer

When constructing the consumer price index, the Bureau of Labor Statistics does not do which of the following?

Correct AnswerverifiedShow Answer

If the quality of a good deteriorates while its price remains the same, then the value of a dollar

Correct AnswerverifiedShow Answer

If the CPI was 104 in 1967 and is 390 today, then $10 in 1967 purchased the same amount of goods and services as

Correct AnswerverifiedShow Answer

Table 24-10 The table below shows the prices of baseballs and baseball bats for three years. Assume the typical consumer's basket consists of 6 baseballs and 2 baseball bats. -Refer to Table 24-10. How much was the cost of the basket in 2008?

Correct AnswerverifiedShow Answer

When we express Babe Ruth's 1931 salary in today's dollars and compare his salary to those of current New York Yankee players, we find that the current median salary of today's Yankees is

Correct AnswerverifiedShow Answer

If you currently make $25,000 a year and the CPI rises from 110 today to 150 in five years, then you need to be making $43,333.33 in five years to have kept pace with consumer price inflation.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Arlo is offered a job in Des Moines, where the CPI is 80, and a job in New York, where the CPI is 125. Arlo's job offer in Des Moines is for $42,000. How much does the New York job have to pay in order for the two salaries to represent the same purchasing power?

Correct AnswerverifiedB

Which of the following changes in the price index produces the greatest rate of inflation: 100 to 110, 150 to 165, or 180 to 198?

Correct AnswerverifiedShow Answer

A dollar figure from 1908 is converted into 2008 dollars by dividing the 2008 price level by the 1908 price level, then multiplying by the 1908 dollar figure.

Correct AnswerverifiedShow Answer

Suppose that over the past year, the real interest rate was 6 percent and the inflation rate was 4 percent. It follows that

Correct AnswerverifiedShow Answer

In a particular economy, the price index was 120 in 2012 and 130 in 2013. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedD

Scenario 24-1 The price tag on a tennis ball in 1975 read $0.10, and the price tag on a tennis ball in 2005 read $1.00. The CPI in 1975 was 52.3, and the CPI in 2005 was 191.3. -Refer to Scenario 24-1. In 1975 dollars, a 1975 tennis ball cost $0.10 and a 2005 tennis ball cost

Correct AnswerverifiedShow Answer

The GDP deflator reflects the

Correct AnswerverifiedShow Answer

Correct Answer
verified
The CPI is...
View Answer

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C

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B

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D

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