Question 1

In Bovania,cattle compose 48% of the consumer price index (CPI),housing composes 32%,and entertainment accounts for the remaining 20%.If,in a certain year,the price of cattle rises by 30% and the price of housing rises by 25%,then:

Accepted Answer

The increase in cattle prices (30% of 48%) contributes to a 14.4% increase in the CPI and the increase in housing prices (25% of 32%) contributes to an 8% increase in the CPI. Therefore, the total increase in CPI is 22.4%. Even if the entertainment in the next year is free (0% increase), the CPI has still increased by 22.4%. So, option C is the correct answer.

Question 2

Medical care typically composes ____ of the typical consumer price index (CPI).

Accepted Answer

Medical care typically composes about 7% of the typical consumer price index (CPI).

Question 3

If 51% of all goods in the consumer price index (CPI)became more expensive and 49% became cheaper:

Accepted Answer

The outcome of inflation or deflation is dependent on the weight of the goods in the basket of goods and the actual percentage changes. If the goods that became more expensive have a higher weight in the CPI, then inflation would occur. On the other hand, if the goods that became cheaper have a greater weight, then deflation would occur. Therefore, the answer cannot be A, B, D, or E as they make assumptions that cannot be guaranteed given the information provided.

Question 4

The consumer price index (CPI)is:

Accepted Answer

The CPI is a measure of the price level based on the consumption patterns of a typical consumer. It calculates the average price change of a basket of goods and services consumed by households, including food, clothing, housing, transportation, and other expenses. It is not a measure of all prices in the economy or of food prices alone.

Question 5

If housing prices increase by 25% and the price of all other goods decreases by 22%,then:

Accepted Answer

The answer of If housing prices increase by 25% and...

Question 6

The concept of a price index is that it is a(n):

Accepted Answer

The answer of The concept of a price index is...

Question 7

According to the December 2013 consumer price index (CPI),the top three consumer expenditure categories are,respectively:

Accepted Answer

The top three consumer expenditure categories according to the December 2013 CPI are housing, transportation, and food and beverages.

Question 8

Your entertainment price index (EPI)was computed based on three goods: movie tickets,popcorn,and limeade.If you change the quantity of these goods from this year to next year and the prices of two of the three goods increase while the other price falls,then your EPI:

Accepted Answer

The change in the EPI will depend on the change in the quantities of the goods and the change in their prices. It is possible for the EPI to rise if the decrease in the price of one good outweighs the increase in the prices of the other goods, and if the quantities of the goods bought are such that the weighted average price increase is small. Alternatively, the EPI can fall if the increase in the weighted average price is significant and the quantities of the goods bought are such that the weighted average price increase is large. The change in the EPI cannot be determined without information on the specific quantities and price changes of the goods.

Question 9

Typically the consumer price index (CPI)is calculated by checking the prices of:

Accepted Answer

The CPI is calculated by checking the prices of about 8,000 goods in about 38 locations across the United States.

Question 10

Typically the largest percentage category in the consumer price index (CPI)is:

Accepted Answer

Housing is typically the largest percentage category in the consumer price index (CPI), accounting for approximately 42% of the index. This includes rent, utilities, and household supplies. Therefore, choice D is the best answer.

Question 11

Chicken becomes more expensive in 2008 at Wegmans in State College,Pennsylvania.This means the consumer price index (CPI):

Accepted Answer

The answer of Chicken becomes more expensive in 2008 at...

Question 12

Tofu becomes more expensive in 2008 at Safeway/Vons in Laguna Niguel,California.This means:

Accepted Answer

The answer of Tofu becomes more expensive in 2008 at...

Question 13

If the price of industrial plastic injection molding machines rose by 20% and the price of oranges fell by 20%,then the consumer price index (CPI)would:

Accepted Answer

The CPI measures the average change in prices paid by consumers for goods and services. Industrial plastic injection molding machines are not consumer goods, so their price change does not affect the CPI. The fall in orange prices would decrease the CPI by the weighted value of oranges.

Question 14

Oranges become more expensive in 2008 at Ukrop's in Charlottesville,Virginia.This means the consumer price index (CPI):

Accepted Answer

The CPI might rise or fall depending on the overall average weighted price of oranges in the United States and whether oranges are included in the CPI. If included, oranges would only make up a small portion of the entire CPI, so the price at Ukrop's would make a relatively small difference.

Question 15

Based on the weight of the consumer price index (CPI),the price of rental housing increases by 15% and that of owned housing by 5%.During the same year,the price of gasoline falls by 22%.We can say that:

Accepted Answer

The weight of rental housing in the CPI is higher than that of owned housing, meaning that an increase in rental housing prices has a greater impact on the overall CPI. Additionally, the decrease in gasoline prices will have a smaller impact on the CPI due to its lower weight in the index. Therefore, all other factors being constant, it is likely that the CPI would rise during the year in question.

Question 16

Education typically composes about ______ of the CPI.

Accepted Answer

Education typically composes about 3% of the Consumer Price Index (CPI). This is because education costs (such as tuition fees and textbooks) are relatively stable compared to other expenses like food, housing, and healthcare.

Question 17

Consider a nation in which the price index was 150 last year and this year it is 130.Which statement is correct?

Accepted Answer

The correct statement is that deflation was 13.33% this year. This is calculated as (150-130)/150 x 100%. Housing prices may or may not have fallen - this cannot be determined from the given information. Option A and D are incorrect as they assume inflation occurred when in fact there was deflation. Option B is incorrect as deflation occurred rather than inflation.

Question 18

According to the consumer price index (CPI),in a particular year,the price of gasoline rises in the United States by 22%; simultaneously,the price of all food items falls by 8%.Which statement is correct?

Accepted Answer

The given information only provides the percentage changes in prices of gasoline and food, but it does not give any information on the weightage given to these items in the CPI calculation, or how the prices of other goods and services have changed. Therefore, it is not possible to conclude anything about the overall CPI or the changes in prices of all goods and services based solely on this information.

Question 19

The agency that measures the consumer price index (CPI)in the United States is the:

Accepted Answer

The Bureau of Labor Statistics is responsible for measuring the CPI, which is a key economic indicator that tracks the prices of a basket of goods and services commonly purchased by households in the United States.

Question 20

If everyone buys the same goods every year and the price of housing rises by 38%,it is:

Accepted Answer

The answer of If everyone buys the same goods every...

Quiz 11: Measuring the Macroeconomy, Inflation, and Unemployment

In Bovania,cattle compose 48% of the consumer price index (CPI) ,housing composes 32%,and entertainment accounts for the remaining 20%.If,in a certain year,the price of cattle rises by 30% and the price of housing rises by 25%,then:

Medical care typically composes ____ of the typical consumer price index (CPI) .

If 51% of all goods in the consumer price index (CPI) became more expensive and 49% became cheaper:

The consumer price index (CPI) is:

If housing prices increase by 25% and the price of all other goods decreases by 22%,then:

The concept of a price index is that it is a(n) :

According to the December 2013 consumer price index (CPI) ,the top three consumer expenditure categories are,respectively:

Your entertainment price index (EPI) was computed based on three goods: movie tickets,popcorn,and limeade.If you change the quantity of these goods from this year to next year and the prices of two of the three goods increase while the other price falls,then your EPI:

Typically the consumer price index (CPI) is calculated by checking the prices of:

Typically the largest percentage category in the consumer price index (CPI) is:

Chicken becomes more expensive in 2008 at Wegmans in State College,Pennsylvania.This means the consumer price index (CPI) :

Tofu becomes more expensive in 2008 at Safeway/Vons in Laguna Niguel,California.This means:

If the price of industrial plastic injection molding machines rose by 20% and the price of oranges fell by 20%,then the consumer price index (CPI) would:

Oranges become more expensive in 2008 at Ukrop's in Charlottesville,Virginia.This means the consumer price index (CPI) :

Based on the weight of the consumer price index (CPI) ,the price of rental housing increases by 15% and that of owned housing by 5%.During the same year,the price of gasoline falls by 22%.We can say that:

Education typically composes about ______ of the CPI.

Consider a nation in which the price index was 150 last year and this year it is 130.Which statement is correct?

According to the consumer price index (CPI) ,in a particular year,the price of gasoline rises in the United States by 22%; simultaneously,the price of all food items falls by 8%.Which statement is correct?

The agency that measures the consumer price index (CPI) in the United States is the:

If everyone buys the same goods every year and the price of housing rises by 38%,it is: