Question 1

In the good old days (1986), the U.S. dollar was worth 1.85 Swiss Francs. Over two decades later in 2012, the dollar was worth 0.91 Swiss Francs. The value of the dollar in Swiss Francs went down by about

Accepted Answer

To find the percentage change, we can use the formula:

Percentage change = [(new value - old value) / old value] x 100%

Plugging in the values:

Percentage change = [(0.91 - 1.85) / 1.85] x 100%
Percentage change = (-0.94 / 1.85) x 100%
Percentage change = -0.51 x 100%
Percentage change = -51%

So the value of the dollar in Swiss Francs went down by 51%. Therefore, the correct answer is B.

Question 2

The federal minimum wage was $7.25 an hour after it was increased in 2009. In 1980, the minimum wage was $3.25 an hour. The CPI (1982-84 = 100) was 82.4 in 1980 and was 214.5 in 2009. Which of the following is true?

Accepted Answer

To adjust the 1980 minimum wage to 2009 dollars using the CPI, we use the formula: (1980 wage) * (2009 CPI / 1980 CPI) = ($3.25) * (214.5 / 82.4) ≈ $8.46. Since $8.46 (the adjusted 1980 wage in 2009 dollars) is higher than the actual 2009 minimum wage of $7.25, it indicates that the real value of the minimum wage has decreased.

Question 3

Suppose the CPI (Consumer Price Index) with respect to some unknown base period was 89 in 1985, 115 in 1990, and 127 in 1993. The CPI rose steadily during this period. The base period used

Accepted Answer

The answer of Suppose the CPI (Consumer Price Index) with...

Question 4

There are separate CPIs for various components of the market basket. For example, the CPI for new motor vehicles (1982-84 = 100) was 132.4 in 2008.
If there were adjustments in the new motor vehicle index due to quality improvements , would the actual increase in new motor vehicle prices be greater, smaller, or the same as in the previous question?

Accepted Answer

The answer of There are separate CPIs for various components...

Question 5

You have decided to buy a yacht, specifically, a Nautor's Swan 68 sailing yacht. This lovely boat cost $384,300 in 1976, when the CPI was 57. The CPI at the beginning of 2000 was about 168, and the yacht then cost $2,300,000. What is the 1976 yacht price expressed in 2000 dollars?

Accepted Answer

To convert the 1976 price to 2000 dollars, we need to adjust for inflation using the CPI.

First, we calculate the inflation rate between 1976 and 2000:

Inflation rate = (CPI in 2000 - CPI in 1976) / CPI in 1976 
Inflation rate = (168 - 57) / 57 
Inflation rate = 1.9474

This means that prices increased by a factor of 1.9474 between 1976 and 2000 due to inflation.

To find the 1976 price in 2000 dollars, we multiply the 1976 price by the inflation factor:

1976 price in 2000 dollars = 384,300 * 1.9474 
1976 price in 2000 dollars = $748,331.62

Therefore, the closest answer choice is C, $1,132,674.

Question 6

The 2007 in-state tuition at the university in the previous question was $7884. So your calculation in the previous question shows that, in the 1989-2007 period,

Accepted Answer

The calculation in the previous question showed that the inflation-adjusted tuition increased from $3,837 in 1989 to $9,049 in 2007. Since the inflation-adjusted tuition increased, tuition went up in real terms.

Question 7

The Consumer Price Index (1982-84 = 100) was about 207 in 2007. In 1989, the CPI was 124. Tuition for in-state students at one Big Ten university was $2032 in 1989. In 2007 dollars, this tuition is equivalent to

Accepted Answer

To convert the 1989 tuition into 2007 dollars, we need to adjust it for inflation using the CPI.

First, we need to find the inflation rate between 1989 and 2007. We can do this by using the formula:

Inflation rate = (CPI in later year - CPI in earlier year) / CPI in earlier year

Plugging in the values we have, we get:

Inflation rate = (207 - 124) / 124 = 67.7%

This tells us that prices have increased by 67.7% between 1989 and 2007.

To adjust the 1989 tuition for inflation, we need to multiply it by the inflation rate:

Adjusted tuition = 2032 * (1 + 0.677) = $3392 (rounded to the nearest dollar)

Therefore, the correct answer is D.

Question 8

A recent monthly press release on the Consumer Price Index says: "The Consumer Price Index for All Urban Consumers (CPI-U) dropped 0.1 percent in August, before seasonal adjustment, to a level of 218.8 (1982-84 = 100), the Bureau of Labor Statistics of the U.S. Department of Labor reported today."
What does "1982-84 = 100" mean here?

Accepted Answer

The CPI measures prices relative to what they were in the years 1982 to 1984, with the average price level of goods and services equaling 100 during that time period.

Question 9

A recent monthly press release on the Consumer Price Index says: "The Consumer Price Index for All Urban Consumers (CPI-U) dropped 0.1 percent in August, before seasonal adjustment, to a level of 218.8 (1982-84 = 100), the Bureau of Labor Statistics of the U.S. Department of Labor reported today."
The CPI was 208.5 in September 2007 and 218.8 in September, 2008. By what percent did the CPI increase in this 12-month period?

Accepted Answer

To find the percent increase in CPI, use the formula:

[(final value - initial value) / initial value] x 100%

Substituting the values given:

[(218.8 - 208.5) / 208.5] x 100% = 4.93% ≈ 4.9%

Therefore, the CPI increased by approximately 4.9% in the 12-month period from September 2007 to September 2008. The answer is choice C.

Question 10

A gallon of unleaded gasoline cost $1.15 in 1995 (CPI = 152.4), while a gallon of gasoline cost $1.99 in 2016 (CPI = 237.1).
After correcting for inflation, has the value of a gallon of unleaded gasoline changed from 1995 to 2016?

Accepted Answer

To adjust the 1995 price to 2016 dollars, use the formula: (Price in Past Year) * (CPI in Current Year / CPI in Past Year). Thus, $1.15 * (237.1 / 152.4) = $1.78 approximately. Since $1.78 is less than $1.99, the real value of a gallon of unleaded gasoline has increased from 1995 to 2016.

Question 11

A gallon of unleaded gasoline cost $1.15 in 1995 (CPI = 152.4), while a gallon of gasoline cost $1.99 in 2016 (CPI = 237.1).
What amount in 2016 has the same buying power as $1.15 in 1995?

Accepted Answer

To find the equivalent amount in 2016 dollars, use the formula for adjusting for inflation: (Amount in Year X dollars) * (CPI in Year Y / CPI in Year X). Plugging in the given values: $1.15 * (237.1 / 152.4) ≈ $1.79.

Quiz 16: The Consumer Price Index and Government Statistics

In the good old days (1986) , the U.S. dollar was worth 1.85 Swiss Francs. Over two decades later in 2012, the dollar was worth 0.91 Swiss Francs. The value of the dollar in Swiss Francs went down by about

The federal minimum wage was $7.25 an hour after it was increased in 2009. In 1980, the minimum wage was $3.25 an hour. The CPI (1982-84 = 100) was 82.4 in 1980 and was 214.5 in 2009. Which of the following is true?

Suppose the CPI (Consumer Price Index) with respect to some unknown base period was 89 in 1985, 115 in 1990, and 127 in 1993. The CPI rose steadily during this period. The base period used

You have decided to buy a yacht, specifically, a Nautor's Swan 68 sailing yacht. This lovely boat cost $384,300 in 1976, when the CPI was 57. The CPI at the beginning of 2000 was about 168, and the yacht then cost $2,300,000. What is the 1976 yacht price expressed in 2000 dollars?

The 2007 in-state tuition at the university in the previous question was $7884. So your calculation in the previous question shows that, in the 1989-2007 period,

The Consumer Price Index (1982-84 = 100) was about 207 in 2007. In 1989, the CPI was 124. Tuition for in-state students at one Big Ten university was $2032 in 1989. In 2007 dollars, this tuition is equivalent to

A gallon of unleaded gasoline cost $1.15 in 1995 (CPI = 152.4) , while a gallon of gasoline cost $1.99 in 2016 (CPI = 237.1) . After correcting for inflation, has the value of a gallon of unleaded gasoline changed from 1995 to 2016?

A gallon of unleaded gasoline cost $1.15 in 1995 (CPI = 152.4) , while a gallon of gasoline cost $1.99 in 2016 (CPI = 237.1) . What amount in 2016 has the same buying power as $1.15 in 1995?