Question 1

For purposes of calculating the CPI, the housing category of consumer spending includes the cost of
A)shelter.
B)fuel and other utilities.
C)household furnishings and operation.
D)All of the above are correct.

Accepted Answer

The housing category of consumer spending includes the cost of shelter, fuel and other utilities, as well as household furnishings and operation. Hence, all of the above options are correct.

Question 2

For purposes of calculating the CPI, the apparel category of consumer spending includes the cost of
A)clothing, but not footwear or jewelry.
B)clothing and footwear, but not jewelry.
C)clothing and jewelry, but not footwear.
D)clothing, footwear, and jewelry.

Accepted Answer

Apparel category of consumer spending includes the cost of clothing, footwear, and jewelry.

Question 3

If the cost of medical care increases by 40 percent, then, other things the same, the CPI is likely to increase by about
A)0.9 percent.
B)3.2 percent.
C)8.0 percent.
D)40 percent.

Accepted Answer

Medical care expenses have a relatively high weight in the CPI, so a 40 percent increase in medical care costs would have a significant impact on the overall index. Based on historical data and analysis, a 40 percent increase in medical care costs would lead to a 3.2 percent increase in the CPI.

Question 4

If the cost of housing increases by 10 percent, then, other things the same, the CPI is likely to increase by about
A)1.7 percent.
B)3.3 percent.
C)4.2 percent.
D)10 percent.

Accepted Answer

The answer of If the cost of housing increases by...

Question 5

For purposes of calculating the CPI, the food & beverages category of consumer spending includes the cost of
A)food away from home.
B)alcoholic beverages.
C)both food away from home and alcoholic beverages.
D)neither food away from home nor alcoholic beverages because these are included in the recreation category of consumer spending.

Accepted Answer

The food & beverages category of consumer spending includes both food away from home and alcoholic beverages for the purpose of calculating CPI. These items are not included in the recreation category.

Question 6

The consumer price index tries to gauge how much incomes must rise to maintain
A)an increasing standard of living.
B)a constant standard of living.
C)a decreasing standard of living.
D)the highest standard of living possible.

Accepted Answer

The consumer price index is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. It is used as a measure of inflation, which is the rate at which prices for goods and services are rising. If incomes remain constant while prices rise, a household's standard of living will decrease. The CPI helps to determine how much incomes must rise to maintain a constant standard of living by identifying how much prices have increased over time.

Question 7

In the basket of goods that is used to compute the consumer price index, the three largest categories of consumer spending are
A)housing, transportation, and recreation.
B)housing, transportation, and food & beverages.
C)housing, food & beverages, and education & communication.
D)housing, medical care, and education & communication.

Accepted Answer

According to the latest data from the Bureau of Labor Statistics (BLS), the three largest categories of consumer spending in the CPI basket are housing (42.4%), transportation (15.9%), and food & beverages (14.9%). Therefore, option B is the best choice.

Question 8

In the basket of goods that is used to compute the consumer price index, which of the following categories of consumer spending is the smallest?
A)food & beverages
B)recreation
C)housing
D)apparel

Accepted Answer

Apparel is the smallest category of consumer spending in the basket of goods used to compute the consumer price index.

Question 9

The goal of the consumer price index is to measure changes in the
A)costs of production.
B)cost of living.
C)relative prices of consumer goods.
D)production of consumer goods.

Accepted Answer

The consumer price index (CPI) is a measure of the cost of living for consumers. It tracks the changes in the prices of a basket of goods and services that are commonly purchased by households. The CPI is widely used as an economic indicator to measure inflation and as a tool for adjusting economic variables such as wages, taxes, and government benefits.

Question 10

If the cost of food & beverages increases by 10 percent, then, other things the same, the CPI is likely to increase by about
A)1.5 percent.
B)7.5 percent.
C)10 percent.
D)20 percent.

Accepted Answer

The increase in food and beverage cost is only a part of the overall basket of goods and services considered in the CPI calculation. Therefore, the increase in CPI is likely to be proportional to the weightage of food and beverages in the CPI basket, which is around 15 percent. Hence, a 10 percent increase in food and beverage costs is likely to lead to a 1.5 percent increase in the CPI.

Question 11

If the cost of apparel increases by 50 percent, then, other things the same, the CPI is likely to increase by about
A)0.5 percent.
B)1.5 percent.
C)3.0 percent.
D)11.8 percent.

Accepted Answer

Apparel is a major component of the CPI, so a 50 percent increase in its cost is likely to have a significant impact on the overall index. The weight of apparel in the CPI varies depending on the specific category (e.g. women's clothing, men's clothing, footwear), but in general, it accounts for around 3-4 percent of the index. Therefore, a 50 percent increase in apparel prices would contribute around 1.5 percentage points to the overall CPI.

Question 12

The relative importance of housing in the breakdown of consumer spending is
A)42 percent.
B)15 percent.
C)6 percent.
D)4 percent.

Accepted Answer

The answer of The relative importance of housing in the...

Question 13

If the cost of transportation increases by 20 percent, then, other things the same, the CPI is likely to increase by about
A)0.3 percent.
B)1.6 percent.
C)3.2 percent.
D)10 percent.

Accepted Answer

The answer of If the cost of transportation increases by...

Question 14

In the basket of goods that is used to compute the consumer price index, which of the following categories of consumer spending is the largest?
A)education & communication
B)food & beverages
C)medical care
D)recreation

Accepted Answer

Food and beverages make up a significant portion of consumer spending, as it is a necessary expense for all individuals. While other categories such as medical care and education & communication may also be essential, they do not have the same level of consistent and widespread consumption as food and beverages.

Question 15

The second largest category, by relative importance, in the CPI calculation is
A)housing.
B)apparel.
C)transportation.
D)medical care.

Accepted Answer

Transportation is the second largest category by relative importance in the CPI calculation. It includes the costs of owning, operating, and maintaining vehicles, as well as public transportation fares.

Question 16

For purposes of calculating the CPI, the transportation category of consumer spending includes the cost of
A)subways.
B)gasoline.
C)both subways and gasoline.
D)neither subways nor gasoline.

Accepted Answer

The transportation category of consumer spending includes both subways and gasoline as they are both forms of transportation that consumers spend money on.

Question 17

In the basket of goods that is used to compute the consumer price index, which of the following categories of consumer spending is the largest?
A)education & communication
B)recreation
C)medical care
D)All of the above categories are about equal in magnitude.

Accepted Answer

The answer of In the basket of goods that is...

Question 18

By far the largest category of goods and services in the CPI basket is
A)housing.
B)transportation.
C)education & communication.
D)food & beverages.

Accepted Answer

Housing is the largest category of goods and services in the Consumer Price Index (CPI) basket, accounting for approximately 42% of the total weight. This is due to the fact that housing costs, such as rent or mortgage payments, property taxes, and utilities, are a significant expense for most households.

Question 19

In the basket of goods that is used to compute the consumer price index, which of the following categories of consumer spending is the smallest?
A)education & communication
B)apparel
C)medical care
D)recreation

Accepted Answer

Apparel is the smallest category of consumer spending in the basket of goods used to compute the consumer price index. This is because it constitutes a relatively small portion of total consumer spending compared to other categories such as housing, food, and transportation.

Question 20

Categories of U.S. consumer spending, ranked from largest to smallest, are
A)housing, food & beverages, education & communication, and transportation.
B)education & communication, housing, food & beverages, and transportation.
C)food & beverages, housing, transportation, and medical care.
D)housing, transportation, food & beverages, and medical care.

Accepted Answer

The answer of Categories of U.S. consumer spending, ranked from...

Quiz 24: Measuring the Cost of Living

For purposes of calculating the CPI, the housing category of consumer spending includes the cost of

For purposes of calculating the CPI, the apparel category of consumer spending includes the cost of

If the cost of medical care increases by 40 percent, then, other things the same, the CPI is likely to increase by about

If the cost of housing increases by 10 percent, then, other things the same, the CPI is likely to increase by about

For purposes of calculating the CPI, the food & beverages category of consumer spending includes the cost of

The consumer price index tries to gauge how much incomes must rise to maintain

In the basket of goods that is used to compute the consumer price index, the three largest categories of consumer spending are

In the basket of goods that is used to compute the consumer price index, which of the following categories of consumer spending is the smallest?

The goal of the consumer price index is to measure changes in the

If the cost of food & beverages increases by 10 percent, then, other things the same, the CPI is likely to increase by about

If the cost of apparel increases by 50 percent, then, other things the same, the CPI is likely to increase by about

The relative importance of housing in the breakdown of consumer spending is

If the cost of transportation increases by 20 percent, then, other things the same, the CPI is likely to increase by about

In the basket of goods that is used to compute the consumer price index, which of the following categories of consumer spending is the largest?

The second largest category, by relative importance, in the CPI calculation is

For purposes of calculating the CPI, the transportation category of consumer spending includes the cost of

In the basket of goods that is used to compute the consumer price index, which of the following categories of consumer spending is the largest?

By far the largest category of goods and services in the CPI basket is

In the basket of goods that is used to compute the consumer price index, which of the following categories of consumer spending is the smallest?

Categories of U.S. consumer spending, ranked from largest to smallest, are