Question 1

Scenario 24-5
Suppose the residents of Mediaville spend all of their income on books, CDs, and DVDs. In 2009, they buy 400 books for $3,200, 200 CDs for $1,400, and 100 DVDs for $900. In 2010, they buy 360 books for $3,240, 250 CDs for $1,500, and 125 DVDs for $1,250. Assume that the market basket for the CPI is defined in the base year.
-Refer to Scenario 24-5. What are the prices of books, CDs, and DVDs in 2009?

Accepted Answer

The answer of Scenario 24-5
Suppose the residents of Mediaville spend...

Question 2

Scenario 24-5
Suppose the residents of Mediaville spend all of their income on books, CDs, and DVDs. In 2009, they buy 400 books for $3,200, 200 CDs for $1,400, and 100 DVDs for $900. In 2010, they buy 360 books for $3,240, 250 CDs for $1,500, and 125 DVDs for $1,250. Assume that the market basket for the CPI is defined in the base year.
-Refer to Scenario 24-5. Using 2010 as the base year, what is the CPI in each year?

Accepted Answer

The answer of Scenario 24-5
Suppose the residents of Mediaville spend...

Question 3

Scenario 24-5
Suppose the residents of Mediaville spend all of their income on books, CDs, and DVDs. In 2009, they buy 400 books for $3,200, 200 CDs for $1,400, and 100 DVDs for $900. In 2010, they buy 360 books for $3,240, 250 CDs for $1,500, and 125 DVDs for $1,250. Assume that the market basket for the CPI is defined in the base year.
-Refer to Scenario 24-5. What are the prices of books, CDs, and DVDs in 2010?

Accepted Answer

The answer of Scenario 24-5
Suppose the residents of Mediaville spend...

Question 4

Scenario 24-5
TOPICS:
Price levels
Inflation
KEYWORDS:
BLOOM'S: Application
CUSTOM ID:
012.24 - SAE - MANK08
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 answer of Scenario 24-5
TOPICS:
Price levels
Inflation
KEYWORDS:
BLOOM'S: Application
CUSTOM ID:
012.24 - SAE...

Question 5

Scenario 24-5
Suppose the residents of Mediaville spend all of their income on books, CDs, and DVDs. In 2009, they buy 400 books for $3,200, 200 CDs for $1,400, and 100 DVDs for $900. In 2010, they buy 360 books for $3,240, 250 CDs for $1,500, and 125 DVDs for $1,250. Assume that the market basket for the CPI is defined in the base year.
-Refer to Scenario 24-5. Using 2010 as the base year, what is the inflation rate in 2010?

Accepted Answer

The answer of Scenario 24-5
Suppose the residents of Mediaville spend...

Question 6

Scenario 24-5
Suppose the residents of Mediaville spend all of their income on books, CDs, and DVDs. In 2009, they buy 400 books for $3,200, 200 CDs for $1,400, and 100 DVDs for $900. In 2010, they buy 360 books for $3,240, 250 CDs for $1,500, and 125 DVDs for $1,250. Assume that the market basket for the CPI is defined in the base year.
-Refer to Scenario 24-5. Using 2009 as the base year, what is the inflation rate in 2010?

Accepted Answer

The answer of Scenario 24-5
Suppose the residents of Mediaville spend...

Question 7

If the CPI was 170 in 1998 and was 187 in 1999, what was the inflation rate in 1999?

Accepted Answer

The answer of If the CPI was 170 in 1998...

Question 8

One advantage of using the CPI over the GDP Deflator is that the CPI updates the basket of goods used to compute the index each month whereas the GDP Deflator maintains the same basket of goods for long periods of time.​

Accepted Answer

The CPI does not update its basket of goods each month; it is updated less frequently, typically every few years, to reflect changes in consumer buying habits. The GDP Deflator, on the other hand, automatically adjusts as it reflects the prices of all goods and services produced domestically, changing with the composition of GDP.

Question 9

Write the formula for computing the cost of a basket of goods in a given period assuming you only have two goods, X and Y, which are bought in quantities Qx and Qy, and sold at prices of Px and Py.

Accepted Answer

The answer of Write the formula for computing the cost...

Question 10

Suppose that the CPI in 2009 is 220 and that the inflation rate is 5% in 2010. What is the CPI in 2010?

Accepted Answer

The answer of Suppose that the CPI in 2009 is...

Question 11

List the five steps for calculating the consumer price index and inflation rate.

Accepted Answer

The answer of List the five steps for calculating the...

Question 12

Scenario 24-5
TOPICS:
Price levels
Inflation
KEYWORDS:
BLOOM'S: Application
CUSTOM ID:
012.24 - SAE - MANK08
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 inflation rate in 2011?

Accepted Answer

The answer of Scenario 24-5
TOPICS:
Price levels
Inflation
KEYWORDS:
BLOOM'S: Application
CUSTOM ID:
012.24 - SAE...

Question 13

Scenario 24-6
TOPICS:
Price levels
Inflation
KEYWORDS:
BLOOM'S: Application
CUSTOM ID:
016.24 - SAE - MANK08
Table 24-14
The table below lists the per pound prices of meat and potatoes for the months of January, February, and March. Assume that the typical consumer buys 25 pounds of meat and 15 pounds of potatoes each month, and that January is the base period. 
-Refer to Table 24-14. Calculate the cost of a basket of goods for each month.

Accepted Answer

The answer of Scenario 24-6
TOPICS:
Price levels
Inflation
KEYWORDS:
BLOOM'S: Application
CUSTOM ID:
016.24 - SAE...

Question 14

During periods of deflation, the real interest rate will be lower than the nominal interest rate.​

Accepted Answer

During periods of deflation, the purchasing power of money increases, which means that borrowers are able to pay off their debts with less valuable dollars. As a result, lenders tend to charge a higher nominal interest rate to compensate for the expected decrease in the value of their money. This means that the real interest rate (which takes into account inflation and deflation) is actually higher than the nominal interest rate.

Question 15

Scenario 24-5
Suppose the residents of Mediaville spend all of their income on books, CDs, and DVDs. In 2009, they buy 400 books for $3,200, 200 CDs for $1,400, and 100 DVDs for $900. In 2010, they buy 360 books for $3,240, 250 CDs for $1,500, and 125 DVDs for $1,250. Assume that the market basket for the CPI is defined in the base year.
-Refer to Scenario 24-5. Using 2009 as the base year, what is the CPI in each year?

Accepted Answer

The answer of Scenario 24-5
Suppose the residents of Mediaville spend...

Question 16

Scenario 24-5
TOPICS:
Price levels
Inflation
KEYWORDS:
BLOOM'S: Application
CUSTOM ID:
012.24 - SAE - MANK08
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 2011 as the base year, what is the inflation rate in 2011?

Accepted Answer

The answer of Scenario 24-5
TOPICS:
Price levels
Inflation
KEYWORDS:
BLOOM'S: Application
CUSTOM ID:
012.24 - SAE...

Question 17

Write the formula for finding the rate of inflation in 2011 if you have only the CPI for the years 2010, 2011, and 2012.

Accepted Answer

The answer of Write the formula for finding the rate...

Question 18

Suppose that the CPI in 1990 was 150, that the inflation rate in 1991 was 6%, and that the inflation rate in 1992 was 4%. What was the CPI in 1991 and 1992?

Accepted Answer

The answer of Suppose that the CPI in 1990 was...

Question 19

Suppose the CPI in 1950 was 24.1 and the CPI in 1975 was 53.8.​ When Ken's income rose from $10,000 per year in 1950 to $20,000 per year in 1970, Ken's standard of living improved between 1950 and 1970.

Accepted Answer

The answer of Suppose the CPI in 1950 was 24.1...

Question 20

Scenario 24-5
TOPICS:
Price levels
Inflation
KEYWORDS:
BLOOM'S: Application
CUSTOM ID:
012.24 - SAE - MANK08
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 2011 as the base year, what is the CPI in each year?

Accepted Answer

The answer of Scenario 24-5
TOPICS:
Price levels
Inflation
KEYWORDS:
BLOOM'S: Application
CUSTOM ID:
012.24 - SAE...

Quiz 24: Measuring the Cost of Living

If the CPI was 170 in 1998 and was 187 in 1999, what was the inflation rate in 1999?

One advantage of using the CPI over the GDP Deflator is that the CPI updates the basket of goods used to compute the index each month whereas the GDP Deflator maintains the same basket of goods for long periods of time.

Write the formula for computing the cost of a basket of goods in a given period assuming you only have two goods, X and Y, which are bought in quantities Qx and Qy, and sold at prices of Px and Py.

Suppose that the CPI in 2009 is 220 and that the inflation rate is 5% in 2010. What is the CPI in 2010?

List the five steps for calculating the consumer price index and inflation rate.

During periods of deflation, the real interest rate will be lower than the nominal interest rate.

Write the formula for finding the rate of inflation in 2011 if you have only the CPI for the years 2010, 2011, and 2012.

Suppose that the CPI in 1990 was 150, that the inflation rate in 1991 was 6%, and that the inflation rate in 1992 was 4%. What was the CPI in 1991 and 1992?

Suppose the CPI in 1950 was 24.1 and the CPI in 1975 was 53.8. When Ken's income rose from $10,000 per year in 1950 to $20,000 per year in 1970, Ken's standard of living improved between 1950 and 1970.

Quiz 24: Measuring the Cost of Living

If the CPI was 170 in 1998 and was 187 in 1999, what was the inflation rate in 1999?

One advantage of using the CPI over the GDP Deflator is that the CPI updates the basket of goods used to compute the index each month whereas the GDP Deflator maintains the same basket of goods for long periods of time.​

Write the formula for computing the cost of a basket of goods in a given period assuming you only have two goods, X and Y, which are bought in quantities Qx and Qy, and sold at prices of Px and Py.

Suppose that the CPI in 2009 is 220 and that the inflation rate is 5% in 2010. What is the CPI in 2010?

List the five steps for calculating the consumer price index and inflation rate.

During periods of deflation, the real interest rate will be lower than the nominal interest rate.​

Write the formula for finding the rate of inflation in 2011 if you have only the CPI for the years 2010, 2011, and 2012.

Suppose that the CPI in 1990 was 150, that the inflation rate in 1991 was 6%, and that the inflation rate in 1992 was 4%. What was the CPI in 1991 and 1992?

Suppose the CPI in 1950 was 24.1 and the CPI in 1975 was 53.8.​ When Ken's income rose from $10,000 per year in 1950 to $20,000 per year in 1970, Ken's standard of living improved between 1950 and 1970.

One advantage of using the CPI over the GDP Deflator is that the CPI updates the basket of goods used to compute the index each month whereas the GDP Deflator maintains the same basket of goods for long periods of time.

During periods of deflation, the real interest rate will be lower than the nominal interest rate.

Suppose the CPI in 1950 was 24.1 and the CPI in 1975 was 53.8. When Ken's income rose from $10,000 per year in 1950 to $20,000 per year in 1970, Ken's standard of living improved between 1950 and 1970.