Deck 24: 1: Sec 241 Mc the Consumer Price Index
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Deck 24: 1: Sec 241 Mc the Consumer Price Index
1
The CPI is calculated
A)weekly.
B)monthly.
C)quarterly.
D)yearly.
A)weekly.
B)monthly.
C)quarterly.
D)yearly.
A
2
The CPI is a measure of the overall cost of
A)the inputs purchased by a typical producer.
B)the goods and services purchased by a typical consumer.
C)the goods and services produced in the economy.
D)the stocks on the New York Stock Exchange.
A)the inputs purchased by a typical producer.
B)the goods and services purchased by a typical consumer.
C)the goods and services produced in the economy.
D)the stocks on the New York Stock Exchange.
B
3
Which of the following agencies calculates the CPI?
A)the National Price Board
B)the Department Of Weight and Measurements
C)the Bureau of Labor Statistics
D)the Congressional Budget Office
A)the National Price Board
B)the Department Of Weight and Measurements
C)the Bureau of Labor Statistics
D)the Congressional Budget Office
B
4
The CPI is a measure of the overall cost of the goods and services bought by
A)a typical firm.
B)the government.
C)a typical consumer.
D)All of the above are correct.
A)a typical firm.
B)the government.
C)a typical consumer.
D)All of the above are correct.
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5
When computing the cost of the basket of goods and services purchased by a typical consumer,which of the following changes from year to year?
A)the quantities of the goods and services purchased
B)the prices of the goods and services
C)the goods and services making up the basket
D)All of the above are correct.
A)the quantities of the goods and services purchased
B)the prices of the goods and services
C)the goods and services making up the basket
D)All of the above are correct.
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6
Which of the following agencies calculates the CPI?
A)Bureau of Labor Statistics
B)Congressional Budget Office
C)Federal Reserve
D)Bureau of National Price Standards and Records
A)Bureau of Labor Statistics
B)Congressional Budget Office
C)Federal Reserve
D)Bureau of National Price Standards and Records
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7
In the calculation of the CPI,tea is given greater weight than beer if
A)the price of tea is higher than the price of beer.
B)it costs more to produce tea than it costs to produce beer.
C)tea is more readily available than beer to the typical consumer.
D)consumers buy more tea than beer.
A)the price of tea is higher than the price of beer.
B)it costs more to produce tea than it costs to produce beer.
C)tea is more readily available than beer to the typical consumer.
D)consumers buy more tea than beer.
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8
Which entity within the U.S.government is responsible for computing and reporting the CPI?
A)the Department of Commerce
B)the Department of Labor
C)the General Accounting Office
D)the Council of Economic Advisers
A)the Department of Commerce
B)the Department of Labor
C)the General Accounting Office
D)the Council of Economic Advisers
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9
Consider a small economy in which consumers buy only two goods: pretzels and cookies.In order to compute the consumer price index for this economy for two or more consecutive years,we assume that
A)the percentage change in the price of pretzels is equal to the percentage change in the price of cookies from year to year.
B)the number of pretzels bought by the typical consumer is equal to the number of cookies bought by the typical consumer in each year.
C)neither the number of pretzels nor the number of cookies bought by the typical consumer changes from year to year.
D)neither the price of pretzels nor the price of cookies changes from year to year.
A)the percentage change in the price of pretzels is equal to the percentage change in the price of cookies from year to year.
B)the number of pretzels bought by the typical consumer is equal to the number of cookies bought by the typical consumer in each year.
C)neither the number of pretzels nor the number of cookies bought by the typical consumer changes from year to year.
D)neither the price of pretzels nor the price of cookies changes from year to year.
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10
The CPI is a measure of the overall cost of the goods and services bought by
A)a typical consumer,and the CPI is computed and reported by the Department of the Treasury.
B)typical consumers and typical business firms,and the CPI is computed and reported by the Department of the Treasury.
C)a typical consumer,and the CPI is computed and reported by the Bureau of Labor Statistics.
D)typical consumers and typical business firms,and the CPI is computed and reported by the Bureau of Labor Statistics.
A)a typical consumer,and the CPI is computed and reported by the Department of the Treasury.
B)typical consumers and typical business firms,and the CPI is computed and reported by the Department of the Treasury.
C)a typical consumer,and the CPI is computed and reported by the Bureau of Labor Statistics.
D)typical consumers and typical business firms,and the CPI is computed and reported by the Bureau of Labor Statistics.
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11
In calculating the CPI,a fixed basket of goods and services is used.The quantities of the goods and services in the fixed basket are determined by
A)surveying consumers.
B)surveying sellers of the goods and services.
C)working backward from the rate of inflation to arrive at imputed values for those quantities.
D)arbitrary choices made by federal government employees.
A)surveying consumers.
B)surveying sellers of the goods and services.
C)working backward from the rate of inflation to arrive at imputed values for those quantities.
D)arbitrary choices made by federal government employees.
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12
In the CPI,goods and services are weighted according to
A)how long a market has existed for each good or service.
B)the extent to which each good or service is regarded by the government as a necessity.
C)how much consumers buy of each good or service.
D)the number of firms that produce and sell each good or service.
A)how long a market has existed for each good or service.
B)the extent to which each good or service is regarded by the government as a necessity.
C)how much consumers buy of each good or service.
D)the number of firms that produce and sell each good or service.
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13
In computing the consumer price index,a base year is chosen.Which of the following statements about the base year is correct?
A)The base year is always the first year among the years for which computations are being made.
B)It is necessary to designate a base year only in the simplest case of two goods;in more realistic cases,it is not necessary to designate a base year.
C)The value of the consumer price index is always 100 in the base year.
D)The base year is always the year in which the cost of the basket was highest among the years for which computations are being made.
A)The base year is always the first year among the years for which computations are being made.
B)It is necessary to designate a base year only in the simplest case of two goods;in more realistic cases,it is not necessary to designate a base year.
C)The value of the consumer price index is always 100 in the base year.
D)The base year is always the year in which the cost of the basket was highest among the years for which computations are being made.
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14
The CPI is calculated
A)monthly by the Department of Commerce.
B)monthly by the Bureau of Labor Statistics.
C)quarterly by the Department of Commerce.
D)quarterly by the Bureau of Labor Statistics.
A)monthly by the Department of Commerce.
B)monthly by the Bureau of Labor Statistics.
C)quarterly by the Department of Commerce.
D)quarterly by the Bureau of Labor Statistics.
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15
Consider a small economy in which consumers buy only two goods: apples and pears.In order to compute the consumer price index for this economy for two or more consecutive years,we assume that
A)the number of apples bought by the typical consumer is equal to the number of pears bought by the typical consumer in each year.
B)neither the number of apples nor the number of pears bought by the typical consumer changes from year to year.
C)the percentage change in the price of apples is equal to the percentage change in the price of pears from year to year.
D)neither the price of apples nor the price of pears changes from year to year.
A)the number of apples bought by the typical consumer is equal to the number of pears bought by the typical consumer in each year.
B)neither the number of apples nor the number of pears bought by the typical consumer changes from year to year.
C)the percentage change in the price of apples is equal to the percentage change in the price of pears from year to year.
D)neither the price of apples nor the price of pears changes from year to year.
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16
What basket of goods and services is used to construct the CPI?
A)a random sample of all goods and services produced in the economy
B)the goods and services that are typically bought by consumers as determined by government surveys
C)only food,clothing,transportation,entertainment,and education
D)the least expensive and the most expensive goods and services in each major category of consumer expenditures
A)a random sample of all goods and services produced in the economy
B)the goods and services that are typically bought by consumers as determined by government surveys
C)only food,clothing,transportation,entertainment,and education
D)the least expensive and the most expensive goods and services in each major category of consumer expenditures
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17
To calculate the CPI,the Bureau of Labor Statistics uses
A)the prices of all goods and services produced domestically.
B)the prices of all final goods and services.
C)the prices of all consumer goods.
D)the prices of some consumer goods.
A)the prices of all goods and services produced domestically.
B)the prices of all final goods and services.
C)the prices of all consumer goods.
D)the prices of some consumer goods.
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18
In the calculation of the CPI,books are given greater weight than magazines if
A)consumers buy more books than magazines.
B)the price of books is higher than the price of magazines.
C)it costs more to produce books than it costs to produce magazines.
D)books are more readily available than magazines to the typical consumer.
A)consumers buy more books than magazines.
B)the price of books is higher than the price of magazines.
C)it costs more to produce books than it costs to produce magazines.
D)books are more readily available than magazines to the typical consumer.
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19
The steps involved in calculating the consumer price index and the inflation rate,in order,are as follows:
A)Choose a base year,update the basket,find the prices,estimate the basket's cost,compute the index,and compute the inflation rate.
B)Choose a base year,fix the basket,find the prices,compute the inflation rate,compute the basket's cost,and compute the index.
C)Fix the basket,find the prices,compute the basket's cost,choose a base year and compute the index,and compute the inflation rate.
D)Fix the basket,find the prices,compute the inflation rate,compute the basket's cost,and choose a base year and compute the index.
A)Choose a base year,update the basket,find the prices,estimate the basket's cost,compute the index,and compute the inflation rate.
B)Choose a base year,fix the basket,find the prices,compute the inflation rate,compute the basket's cost,and compute the index.
C)Fix the basket,find the prices,compute the basket's cost,choose a base year and compute the index,and compute the inflation rate.
D)Fix the basket,find the prices,compute the inflation rate,compute the basket's cost,and choose a base year and compute the index.
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20
Reports on the current consumer price index are released every
A)quarter.
B)two weeks.
C)month.
D)week.
A)quarter.
B)two weeks.
C)month.
D)week.
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21
Suppose a basket of goods and services has been selected to calculate the CPI and 2012 has been selected as the base year.In 2012,the basket's cost was $50;in 2014,the basket's cost was $51;and in 2016,the basket's cost was $52.The value of the CPI in 2014 was
A)98.0.
B)102.0.
C)104.0.
D)151.0.
A)98.0.
B)102.0.
C)104.0.
D)151.0.
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22
Suppose a basket of goods and services has been selected to calculate the CPI.In 2002,the basket's cost was $80;in 2008,the basket's cost was $92;and in 2010,the basket's cost was $108.The base year must be
A)2002.
B)2008.
C)one of the years between 2008 and 2010.
D)The base year cannot be determined from the given information.
A)2002.
B)2008.
C)one of the years between 2008 and 2010.
D)The base year cannot be determined from the given information.
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23
The inflation rate is calculated
A)by determining the change in the price index from the preceding period.
B)by adding up the price increases of all goods and services.
C)by computing a simple average of the price increases for all goods and services.
D)by determining the percentage increase in the price index from the preceding period.
A)by determining the change in the price index from the preceding period.
B)by adding up the price increases of all goods and services.
C)by computing a simple average of the price increases for all goods and services.
D)by determining the percentage increase in the price index from the preceding period.
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24
The price index was 120 in 2012 and 126 in 2013.What was the inflation rate?
A)5.0 percent
B)6.0 percent
C)7.2 percent
D)105 percent
A)5.0 percent
B)6.0 percent
C)7.2 percent
D)105 percent
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25
If 2012 is the base year,then the inflation rate for 2012 equals
A)
B)
C)
D)
A)

B)

C)

D)

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26
The inflation rate is calculated
A)by determining the change in the price index from the preceding period.
B)by determining the change in the price index from the base year.
C)by determining the percentage change in the price index from the preceding period.
D)by determining the percentage change in the price index from the base year.
A)by determining the change in the price index from the preceding period.
B)by determining the change in the price index from the base year.
C)by determining the percentage change in the price index from the preceding period.
D)by determining the percentage change in the price index from the base year.
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27
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
A)97.14.
B)100.10.
C)102.94.
D)109.38.
A)97.14.
B)100.10.
C)102.94.
D)109.38.
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28
Suppose a basket of goods and services has been selected to calculate the CPI and 2014 has been selected as the base year.In 2013,the basket's cost was $80;in 2014,the basket's cost was $86;and in 2015,the basket's cost was $90.The value of the CPI in 2015 was
A)112.5 and the inflation rate was 12.5%.
B)112.5 and the inflation rate was 4.6%.
C)104.6 and the inflation rate was 4.6%.
D)104.6 and the inflation rate was 12.5%.
A)112.5 and the inflation rate was 12.5%.
B)112.5 and the inflation rate was 4.6%.
C)104.6 and the inflation rate was 4.6%.
D)104.6 and the inflation rate was 12.5%.
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29
Suppose a basket of goods and services has been selected to calculate the CPI and 2012 has been selected as the base year.In 2012,the basket's cost was $50;in 2014,the basket's cost was $52;and in 2016,the basket's cost was $55.The value of the CPI in 2016 was
A)90.9.
B)104.0.
C)105.0.
D)110.0.
A)90.9.
B)104.0.
C)105.0.
D)110.0.
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30
Suppose a basket of goods and services has been selected to calculate the CPI and 2014 has been selected as the base year.In 2012,the basket's cost was $50;in 2014,the basket's cost was $52;and in 2016,the basket's cost was $58.The value of the CPI in 2016 was
A)106.0.
B)104.0.
C)111.5.
D)116.0.
A)106.0.
B)104.0.
C)111.5.
D)116.0.
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31
Suppose a basket of goods and services has been selected to calculate the CPI and 2012 has been selected as the base year.In 2012,the basket's cost was $77;in 2013,the basket's cost was $82;and in 2014,the basket's cost was $90.The value of the CPI in 2014 was
A)109.8 and the inflation rate was 9.8%.
B)109.8 and the inflation rate was 16.9%.
C)116.9 and the inflation rate was 9.8%.
D)116.9 and the inflation rate was 16.9%.
A)109.8 and the inflation rate was 9.8%.
B)109.8 and the inflation rate was 16.9%.
C)116.9 and the inflation rate was 9.8%.
D)116.9 and the inflation rate was 16.9%.
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32
Which of the following is the correct formula for calculating the inflation rate?
A)
B)
C)
D)
A)

B)

C)

D)

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33
Suppose a basket of goods and services has been selected to calculate the CPI and 2012 has been chosen as the base year.In 2012,the basket's cost was $80.00;in 2013,the basket's cost was $84;and in 2014,the basket's cost was $87.60.The value of the CPI was
A)100 in 2012.
B)105 in 2013.
C)109.5 in 2014.
D)All of the above are correct.
A)100 in 2012.
B)105 in 2013.
C)109.5 in 2014.
D)All of the above are correct.
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34
Which of the following is the correct formula for calculating the consumer price index?
A)
B)
C)
D)
A)

B)

C)

D)

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35
For any given year,the CPI is the price of the basket of goods and services in the
A)given year divided by the price of the basket in the base year,then multiplied by 100.
B)given year divided by the price of the basket in the previous year,then multiplied by 100.
C)base year divided by the price of the basket in the given year,then multiplied by 100.
D)previous year divided by the price of the basket in the given year,then multiplied by 100.
A)given year divided by the price of the basket in the base year,then multiplied by 100.
B)given year divided by the price of the basket in the previous year,then multiplied by 100.
C)base year divided by the price of the basket in the given year,then multiplied by 100.
D)previous year divided by the price of the basket in the given year,then multiplied by 100.
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36
The price index was 136 in one year and 142 in the next year.What was the inflation rate between the two years?
A)1.04 percent
B)4.41 percent
C)6.00 percent
D)42.00 percent
A)1.04 percent
B)4.41 percent
C)6.00 percent
D)42.00 percent
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37
If the consumer price index was 96 in 2012,100 in 2013,and 102 in 2014,then the base year must be
A)2012.
B)2013.
C)2014.
D)The base year cannot be determined from the given information.
A)2012.
B)2013.
C)2014.
D)The base year cannot be determined from the given information.
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38
If 2010 is the base year,then the inflation rate in 2015 equals
A)
B)
C)
D)
A)

B)

C)

D)

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39
The price index was 220 in one year and 238.2 in the next year.What was the inflation rate?
A)8.3 percent
B)108.3 percent
C)4.8 percent
D)38.2 percent
A)8.3 percent
B)108.3 percent
C)4.8 percent
D)38.2 percent
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40
If the consumer price index was 100 in the base year and 106 in the following year,then the inflation rate was
A)1.06 percent.
B)6 percent.
C)10.6 percent.
D)106 percent.
A)1.06 percent.
B)6 percent.
C)10.6 percent.
D)106 percent.
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41
In an imaginary economy,consumers buy only hot dogs and hamburgers.The fixed basket consists of 10 hot dogs and 6 hamburgers.A hot dog cost $3 in 2006 and $5.40 in 2007.A hamburger cost $5 in 2006 and $6 in 2007.Which of the following statements is correct?
A)When 2006 is chosen as the base year,the consumer price index is 90 in 2007.
B)When 2006 is chosen as the base year,the inflation rate is 150 percent in 2007.
C)When 2007 is chosen as the base year,the consumer price index is 100 in 2006.
D)When 2007 is chosen as the base year,the inflation rate is 50 percent in 2007.
A)When 2006 is chosen as the base year,the consumer price index is 90 in 2007.
B)When 2006 is chosen as the base year,the inflation rate is 150 percent in 2007.
C)When 2007 is chosen as the base year,the consumer price index is 100 in 2006.
D)When 2007 is chosen as the base year,the inflation rate is 50 percent in 2007.
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42
If the price index was 90 in year 1,100 in year 2,and 95 in year 3,then the economy experienced
A)10 percent inflation between years 1 and 2 ,and 5 percent inflation between years 2 and 3.
B)10 percent inflation between years 1 and 2,and 5 percent deflation between years 2 and 3.
C)11.1 percent inflation between years 1 and 2,and 5 percent inflation between years 2 and 3.
D)11.1 percent inflation between years 1 and 2,and 5 percent deflation between years 2 and 3.
A)10 percent inflation between years 1 and 2 ,and 5 percent inflation between years 2 and 3.
B)10 percent inflation between years 1 and 2,and 5 percent deflation between years 2 and 3.
C)11.1 percent inflation between years 1 and 2,and 5 percent inflation between years 2 and 3.
D)11.1 percent inflation between years 1 and 2,and 5 percent deflation between years 2 and 3.
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43
The price index was 150 in the first year,160 in the second year,and 165 in the third year.Which of the following statements is correct?
A)The price level was higher in the second year than in the first year,and it was higher in the third year than in the second year.
B)The inflation rate was positive between the first and second years,and it was positive between the second and third years.
C)The inflation rate was lower between the second and third years than it was between the first and second years.
D)All of the above are correct.
A)The price level was higher in the second year than in the first year,and it was higher in the third year than in the second year.
B)The inflation rate was positive between the first and second years,and it was positive between the second and third years.
C)The inflation rate was lower between the second and third years than it was between the first and second years.
D)All of the above are correct.
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44
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?
A)100 to 110
B)150 to 165
C)180 to 198
D)All of these changes produce the same rate of inflation.
A)100 to 110
B)150 to 165
C)180 to 198
D)All of these changes produce the same rate of inflation.
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45
If the CPI was 110 this year and 100 last year,then
A)the cost of the CPI basket of goods and services increased by 10 percent this year.
B)the price level increased by 110 percent this year.
C)the inflation rate for this year was 10 percent higher than the inflation rate for last year.
D)All of the above are correct.
A)the cost of the CPI basket of goods and services increased by 10 percent this year.
B)the price level increased by 110 percent this year.
C)the inflation rate for this year was 10 percent higher than the inflation rate for last year.
D)All of the above are correct.
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46
Which of the following changes in the price index produces the greatest rate of inflation: 80 to 100,100 to 120,or 150 to 170?
A)80 to 100
B)100 to 120
C)150 to 170
D)All of these changes produce the same rate of inflation.
A)80 to 100
B)100 to 120
C)150 to 170
D)All of these changes produce the same rate of inflation.
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47
If the CPI was 125 this year and 120 last year,then
A)the cost of the CPI basket of goods and services increased by 4.2 percent this year.
B)the price level increased by 4.2 percent this year.
C)the inflation rate for this year was 4.2 percent.
D)All of the above are correct.
A)the cost of the CPI basket of goods and services increased by 4.2 percent this year.
B)the price level increased by 4.2 percent this year.
C)the inflation rate for this year was 4.2 percent.
D)All of the above are correct.
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48
Which of the following changes in the price index produces the greatest rate of inflation: 12 to 15,20 to 24,or 30 to 35?
A)12 to 15
B)20 to 24
C)30 to 35
D)All of these changes produce the same rate of inflation.
A)12 to 15
B)20 to 24
C)30 to 35
D)All of these changes produce the same rate of inflation.
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49
From 2013 to 2014,the CPI for medical care increased from 150 to 159.What was the inflation rate for medical care?
A)5.7 percent
B)6.0 percent
C)9.0 percent
D)59.0 percent
A)5.7 percent
B)6.0 percent
C)9.0 percent
D)59.0 percent
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50
The price index was 150 in the first year,142.5 in the second year,and 138.2 in the third year.The economy experienced
A)5.0 percent deflation between the first and second years,and 3.0 percent deflation between the second and third years.
B)7.5 percent deflation between the first and second years,and 4.3 percent deflation between the second and third years.
C)5.3 percent inflation between the first and second years,and 4.1 percent inflation between the second and third years.
D)7.5 percent inflation between the first and second years,and 4.3 percent inflation between the second and third years.
A)5.0 percent deflation between the first and second years,and 3.0 percent deflation between the second and third years.
B)7.5 percent deflation between the first and second years,and 4.3 percent deflation between the second and third years.
C)5.3 percent inflation between the first and second years,and 4.1 percent inflation between the second and third years.
D)7.5 percent inflation between the first and second years,and 4.3 percent inflation between the second and third years.
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51
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
A)4.6 percent.
B)6.5 percent.
C)4.4 percent.
D)46.5 percent.
A)4.6 percent.
B)6.5 percent.
C)4.4 percent.
D)46.5 percent.
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52
Between October 2014 and October 2015,the CPI in Canada rose from 120 to 124 and the CPI in Mexico rose from 210 to 229.1.What were the inflation rates for Canada and Mexico over this one-year period?
A)3.3 percent for Canada and 9.1 percent for Mexico
B)3.3 percent for Canada and 8.3 percent for Mexico
C)3.2 percent for Canada and 9.1 percent for Mexico
D)3.2 percent for Canada and 8.3 percent for Mexico
A)3.3 percent for Canada and 9.1 percent for Mexico
B)3.3 percent for Canada and 8.3 percent for Mexico
C)3.2 percent for Canada and 9.1 percent for Mexico
D)3.2 percent for Canada and 8.3 percent for Mexico
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53
Which of the following changes in the price index produces the greatest rate of inflation: 106 to 112,112 to 118,or 118 to 124?
A)106 to 112
B)112 to 120
C)118 to 126
D)All of these changes produce the same rate of inflation.
A)106 to 112
B)112 to 120
C)118 to 126
D)All of these changes produce the same rate of inflation.
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54
In a particular economy,the price index was 120 in 2012 and 130 in 2013.Which of the following statements is correct?
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.
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.
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55
Suppose the price index was 110 in 2004,120 in 2005,and 125 in 2006.Which of the following statements is correct?
A)The economy experienced inflation between 2004 and 2005 and between 2005 and 2006.
B)The inflation rate was positive between 2004 and 2005,and it was negative between 2005 and 2006.
C)The inflation rate was higher between 2005 and 2006 than it was between 2004 and 2005.
D)All of the above are correct.
A)The economy experienced inflation between 2004 and 2005 and between 2005 and 2006.
B)The inflation rate was positive between 2004 and 2005,and it was negative between 2005 and 2006.
C)The inflation rate was higher between 2005 and 2006 than it was between 2004 and 2005.
D)All of the above are correct.
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56
If the consumer price index changes from 125 in September to 150 in October,what is the rate of inflation?
A)45.5%
B)20.0%
C)16.7%
D)9.1%
A)45.5%
B)20.0%
C)16.7%
D)9.1%
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57
The price index was 170 in the first year,180 in the second year,and 195 in the third year.The inflation rate was about
A)5.6 percent between the first and second years,and 7.7 percent between the second and third years.
B)5.9 percent between the first and second years,and 8.3 percent between the second and third years.
C)10 percent between the first and second years,and 15 percent between the second and third years.
D)80 percent between the first and second years,and 95 percent between the second and third years.
A)5.6 percent between the first and second years,and 7.7 percent between the second and third years.
B)5.9 percent between the first and second years,and 8.3 percent between the second and third years.
C)10 percent between the first and second years,and 15 percent between the second and third years.
D)80 percent between the first and second years,and 95 percent between the second and third years.
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58
From 2009 to 2010,the CPI for education increased from 279.3 to 281.8.What was the inflation rate for education between 2009 and 2010?
A)0.9%
B)9.0%
C)2.5%
D)90%
A)0.9%
B)9.0%
C)2.5%
D)90%
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59
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 consumer price index in 2007 was 125,then how much did a magazine cost in 2007?
A)$0.83
B)$2.25
C)$2.50
D)$3.00
A)$0.83
B)$2.25
C)$2.50
D)$3.00
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60
The market basket used to calculate the CPI in Aquilonia is 4 loaves of bread,6 gallons of milk,2 shirts,and 2 pairs of pants.In 2005,bread cost $1.00 per loaf,milk cost $1.50 per gallon,shirts cost $6.00 each,and pants cost $10.00 per pair.In 2006,bread cost $1.50 per loaf,milk cost $2.00 per gallon,shirts cost $7.00 each,and pants cost $12.00 per pair.Using 2005 as the base year,what was Aquilonia's inflation rate in 2006?
A)4 percent
B)11 percent
C)19.6 percent
D)24.4 percent
A)4 percent
B)11 percent
C)19.6 percent
D)24.4 percent
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61
The price index that measures the cost of a basket of goods and services bought by firms is called the
A)industrial price index.
B)producer price index.
C)core price index.
D)GDP deflator.
A)industrial price index.
B)producer price index.
C)core price index.
D)GDP deflator.
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62
Suppose that in 2010,the producer price index increases by 1.5 percent.As a result,economists most likely will predict that
A)GDP will increase in 2011.
B)the producer price index will increase by more than 1.5 percent in 2011.
C)interest rates will decrease in the future.
D)the consumer price index will increase in the future.
A)GDP will increase in 2011.
B)the producer price index will increase by more than 1.5 percent in 2011.
C)interest rates will decrease in the future.
D)the consumer price index will increase in the future.
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63
Which of the following is not an example of a price index computed by the Bureau of Labor Statistics?
A)the Los Angeles price index
B)the energy price index
C)the producer price index
D)the stock price index
A)the Los Angeles price index
B)the energy price index
C)the producer price index
D)the stock price index
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64
By far the largest category of goods and services in the CPI basket is
A)housing.
B)transportation.
C)education & communication.
D)food & beverages.
A)housing.
B)transportation.
C)education & communication.
D)food & beverages.
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65
The producer price index measures the cost of a basket of goods and services
A)typically produced in the economy.
B)produced for a typical consumer.
C)sold by producers.
D)bought by firms.
A)typically produced in the economy.
B)produced for a typical consumer.
C)sold by producers.
D)bought by firms.
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66
For an imaginary economy,the value of the consumer price index was 138.75 in 2016,and the inflation rate was 10 percent between 2015 and 2016.The consumer price index in 2015 was
A)126.1.
B)128.8.
C)148.8.
D)152.6.
A)126.1.
B)128.8.
C)148.8.
D)152.6.
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67
When constructing the consumer price index,the Bureau of Labor Statistics does not do which of the following?
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.
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.
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68
For an imaginary economy,the consumer price index was 80 in 2014,100 in 2015,and 140 in 2016.Which of the following statements is correct?
A)If the basket of goods that is used to calculate the CPI cost $40 in 2014,then that basket of goods cost $60 in 2015.
B)If the basket of goods that is used to calculate the CPI cost $25 in 2015,then that basket of goods cost $35 in 2016.
C)The overall level of prices increased by 60 percent between 2014 and 2016.
D)All of the above are correct.
A)If the basket of goods that is used to calculate the CPI cost $40 in 2014,then that basket of goods cost $60 in 2015.
B)If the basket of goods that is used to calculate the CPI cost $25 in 2015,then that basket of goods cost $35 in 2016.
C)The overall level of prices increased by 60 percent between 2014 and 2016.
D)All of the above are correct.
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69
Suppose a basket of goods and services has been selected to calculate the consumer price index.In 2005,the basket of goods cost $108.00;in 2006,it cost $135.00;and in 2007,it cost $168.75.Which of the following statements is correct?
A)Using 2005 as the base year,the economy's inflation rate was higher in 2007 than it was in 2006.
B)If 2007 is the base year,then the CPI is 33.75 in 2006.
C)If the CPI is 156.25 in 2007,then 2005 is the base year.
D)Using 2005 as the base year,the economy's inflation rate for 2006 was 27 percent.
A)Using 2005 as the base year,the economy's inflation rate was higher in 2007 than it was in 2006.
B)If 2007 is the base year,then the CPI is 33.75 in 2006.
C)If the CPI is 156.25 in 2007,then 2005 is the base year.
D)Using 2005 as the base year,the economy's inflation rate for 2006 was 27 percent.
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70
The price index was 128 in 2013,and the inflation rate was 24 percent between 2012 and 2013.The price index in 2012 was
A)104.0.
B)103.2.
C)158.7.
D)152.0.
A)104.0.
B)103.2.
C)158.7.
D)152.0.
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71
For an imaginary economy,the value of the consumer price index was 140 in 2013,and the inflation rate was 5.0 percent between 2013 and 2014.The consumer price index in 2014 was
A)145.0.
B)147.0.
C)135.0.
D)133.3.
A)145.0.
B)147.0.
C)135.0.
D)133.3.
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72
Suppose the price index was 100 in 2014,109 in 2015,and the inflation rate was lower between 2015 and 2016 than it was between 2014 and 2015.This means that
A)the price index in 2016 was lower than 109.0.
B)the price index in 2016 was lower than 118.9.
C)the price index in 2016 was lower than 118.0.
D)the inflation rate between 2015 and 2016 was lower than 1.09 percent.
A)the price index in 2016 was lower than 109.0.
B)the price index in 2016 was lower than 118.9.
C)the price index in 2016 was lower than 118.0.
D)the inflation rate between 2015 and 2016 was lower than 1.09 percent.
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73
The price index was 92 in 2014,and the inflation rate was 8.7 percent between 2013 and 2014.The price index in 2013 was
A)100.0.
B)100.7.
C)83.3.
D)84.6.
A)100.0.
B)100.7.
C)83.3.
D)84.6.
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74
Changes in the producer price index are often thought to be useful in predicting changes in
A)stock prices.
B)the consumer price index.
C)the unemployment rate.
D)the rate of output of goods and services.
A)stock prices.
B)the consumer price index.
C)the unemployment rate.
D)the rate of output of goods and services.
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75
Suppose the price index was 105 in 2017,126 in 2018,and the inflation rate was lower between 2018 and 2019 than it was between 2017 and 2018.This means that
A)the price index in 2019 was lower than 126.0.
B)the price index in 2019 was lower than 147.0.
C)the price index in 2019 was lower than 151.2.
D)the inflation rate between 2018 and 2019 was lower than 1.2 percent.
A)the price index in 2019 was lower than 126.0.
B)the price index in 2019 was lower than 147.0.
C)the price index in 2019 was lower than 151.2.
D)the inflation rate between 2018 and 2019 was lower than 1.2 percent.
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76
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?
A)$1.87
B)$2.08
C)$2.32
D)$3.00
A)$1.87
B)$2.08
C)$2.32
D)$3.00
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77
For an imaginary economy,the consumer price index was 115.00 in 2004,126.50 in 2005,and 136.62 in 2006.Which of the following statements is correct?
A)For this economy,the base year must be 2004.
B)If the basket of goods that is used to calculate the CPI cost $75.00 in the base year,then that basket of goods cost $115.00 in 2004.
C)This economy's rate of inflation for 2006 is 10.12 percent.
D)None of the above is correct.
A)For this economy,the base year must be 2004.
B)If the basket of goods that is used to calculate the CPI cost $75.00 in the base year,then that basket of goods cost $115.00 in 2004.
C)This economy's rate of inflation for 2006 is 10.12 percent.
D)None of the above is correct.
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78
In an imaginary economy,consumers buy only razors and cologne.The fixed basket consists of 6 razors and 4 bottles of cologne.A razor cost $20 in 2009 and $25 in 2010.A bottle of cologne cost $30 in 2009 and $40 in 2010.Using 2009 as the base year,which of the following statements is correct?
A)For the typical consumer,the number of dollars spent on razors is equal to the number of dollars spent on cologne in each of the two years.
B)The consumer price index is 310 in 2010.
C)The rate of inflation is 29.17% in 2010.
D)None of the above is correct.
A)For the typical consumer,the number of dollars spent on razors is equal to the number of dollars spent on cologne in each of the two years.
B)The consumer price index is 310 in 2010.
C)The rate of inflation is 29.17% in 2010.
D)None of the above is correct.
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79
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?
A)The CPI was 100 in 2003,110 in 2004,and 105 in 2005.
B)The CPI was 100 in 2003,120 in 2004,and 135 in 2005.
C)The CPI was 100 in 2003,105 in 2004,and 130 in 2005.
D)The CPI was 100 in 2003,90 in 2004,and 88 in 2005.
A)The CPI was 100 in 2003,110 in 2004,and 105 in 2005.
B)The CPI was 100 in 2003,120 in 2004,and 135 in 2005.
C)The CPI was 100 in 2003,105 in 2004,and 130 in 2005.
D)The CPI was 100 in 2003,90 in 2004,and 88 in 2005.
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80
Assume an economy experienced a positive rate of inflation between 2003 and 2004 and again between 2004 and 2005.However,the inflation rate was lower between 2004 and 2005 than it was between 2003 and 2004.Which of the following scenarios is consistent with this assumption?
A)The CPI was 100 in 2003,110 in 2004,and 105 in 2005.
B)The CPI was 100 in 2003,120 in 2004,and 135 in 2005.
C)The CPI was 100 in 2003,105 in 2004,and 130 in 2005.
D)The CPI was 100 in 2003,90 in 2004,and 88 in 2005.
A)The CPI was 100 in 2003,110 in 2004,and 105 in 2005.
B)The CPI was 100 in 2003,120 in 2004,and 135 in 2005.
C)The CPI was 100 in 2003,105 in 2004,and 130 in 2005.
D)The CPI was 100 in 2003,90 in 2004,and 88 in 2005.
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