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Exam 6: Measuring the Cost of Living

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Question 171

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From 2013 to 2014, the CPI for medical care increased from 150 to 159. What was the inflation rate for medical care?

A) 5.7 percent
B) 6.0 percent
C) 9.0 percent
D) 59.0 percent

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Question 172

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There is no longer much debate among economists concerning the severity of and the solution to the problems in using the CPI to measure the cost of living.

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Question 173

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The CPI is a measure of the overall cost of the goods and services bought by a typical consumer.

If the CPI was 120 in 1994, was 126 in 1995, and was 134.82 in 1996, what was the inflation rate in 1995 and in 1996?

Persistent increases in the overall level of prices have been the norm.

Table 24-10 The table below shows the prices of baseballs and baseball bats for three years. Assume the typical consumer's basket consists of 6 baseballs and 2 baseball bats. -Refer to Table 24-10. If 2010 is the base year, then the consumer price index was

If the nominal interest rate is 6 percent and the rate of inflation is 2 percent, then the real interest rate is

Suppose that the price of one gallon of milk was $0.25 in 1950, that the CPI in 1950 was 25, and that in 2000 the CPI was 200.What is the price of a 1950 gallon of milk in 2000 dollars?

Table 24-1 The table below lists annual consumer price index and inflation rates for a country over the period 2005-2010. Assume the year 2005 is used as the base year. -Refer to Table 24-1. What belongs in space E?

If the nominal interest rate is 4 percent and the real interest rate is 7 percent, then the inflation rate is

Table 24-5 The table below pertains to Wrexington, an economy in which the typical consumer's basket consists of 20 pounds of meat and 10 toys. -Refer to Table 24-5. If the base year is 2004, then the CPI in 2005 was

If the real value of an item bought ten years ago is less than it's nominal value at that time, what can one infer about the change in the overall price level during this ten year period?

In 1974, one could buy a theater for $1.25. Today the same theater ticket costs $6.50. Which pair of CPIs would imply that the cost in today's dollars was the same for both tickets?

For an imaginary economy, the consumer price index was 80 in 2014, 100 in 2015, and 140 in 2016. Which of the following statements is correct?

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?

The CPI and the GDP deflator

Table 24-12. Will's expenditures on food for three consecutive years, along with other values, are presented in the table below. -Refer to Table 24-12. If the nominal interest rate was 8 percent in 2010, then

In 1986, Ken bought a Ford Mustang for $8,000. If the price index was 122 in 1986 and the price index was 280 in 2011, then what is the price of the Mustang in 2011 dollars?

In 1970, Professor Plum earned $12,000; in 1980, he earned $24,000; and in 1990, he earned $36,000. If the CPI was 40 in 1970, 70 in 1980, and 130 in 1990, then in real terms, Professor Plum's salary was highest in

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?