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Exam 24: Measuring the Cost of Living

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Question 61

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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

E) B) and D)
F) A) and C)

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Question 62

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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.

E) A) and B)
F) A) and C)

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Question 63

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It is possible to observe a positive nominal interest rate together with a negative real interest rate.

Scenario 24-4 Quinn has job offers in Wrexington and across the country in Charlieville. The Wrexington job would pay a salary of $50,000 per year, and the Charlieville job would pay a salary of $40,000 per year. The CPI in Wrexington is 150, and the CPI in Charlieville is 90. -Refer to Scenario 24-4. The Charlieville salary in Wrexington dollars is

Suppose you know the value of the consumer price index (CPI) in year 2 as well as the inflation rate in year 2. Which of the following equations is valid for the CPI in year 1?

The economy's inflation rate is the

When box office receipts are corrected for inflation, the most popular movie of all time is

Social Security payments are indexed for inflation using the CPI. A recent newspaper editorial claimed that Social Security recipients are harmed by years of low inflation because they do not receive as large an increase in their payments as they do in years of high inflation. Which of the following statements is correct?

Which of the following is the most accurate statement about the effects of quality change on the CPI?

Which is likely to have the larger effect on the CPI, a 2 percent increase in the price of food or a 3 percent increase in the price of diamond rings? Explain.

Suppose the consumer price index was 184 in 2009 and 198.17 in 2010. The nominal interest rate during this period was 5.8 percent. What was the real interest rate during this period?

Table 24-11. Megan's salary for three consecutive years, along with other values, is presented in the table below. -Refer to Table 24-11. Suppose the consumer price index for 2013 is not necessarily 235. Then Megan's 2013 salary represents more purchasing power than her 2011 salary as long as the consumer price index for 2013 is

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

Table 24-15 TOPICS: Price levels Inflation KEYWORDS: BLOOM'S: Application CUSTOM ID: 022.24 - SAE - MANK08 Table 24-16 The table below lists annual consumer price index and inflation rates for a country over the period 2010-2013. Assume the year 2010 is used as the base year. -Refer to Table 24-16. Calculate the missing value that belongs in space B.

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?

When looking at a graph of nominal and real interest rates you notice the graph for nominal rates and the graph for real rates cross each other many times. From this you conclude

The group of goods and services used to compute the GDP deflator changes automatically over time, but the group of goods and services used to compute the CPI does not.

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

Table 24-3 The table below pertains to Iowan, an economy in which the typical consumer's basket consists of 4 pounds of pork and 3 bushels of corn. -Refer to Table 24-3. If 2012 is the base year, then the inflation rate in 2013 was

The U.S. income tax system is completely indexed for inflation.