Question 1

You receive a raise of 3% at work.The rate of inflation is reported to be 5%.

Accepted Answer

A) Your purchasing power has decreased 2%. 
B) Your purchasing power has increased 2%. 
C) Your purchasing power remains the same. 
D) Your purchasing power is not a variable and therefore is not affected. 
A) Your purchasing power has decreased 2%. 
B) Your purchasing power has increased 2%. 
C) Your purchasing power remains the same. 
D) Your purchasing power is not a variable and therefore is not affected. A

Question 2

A price level of 120 means that prices have

Accepted Answer

A) increased 120 percent since the base year. 
B) increased 20 percent since the base year. 
C) increased 0.12 percent since the base year. 
D) increased 12 times since the base year. 
A) increased 120 percent since the base year. 
B) increased 20 percent since the base year. 
C) increased 0.12 percent since the base year. 
D) increased 12 times since the base year. B

Question 3

_____________________ will benefit from inflation.

Accepted Answer

A) Savers 
B) Borrowers 
C) Lenders 
D) People on fixed income 
A) Savers 
B) Borrowers 
C) Lenders 
D) People on fixed income B

Question 4

The most widely used measure for tracking prices in the United States is the

Accepted Answer

A) GDP Inflator. 
B) Consumer Price Index. 
C) Personal Consumption Expenditures. 
D) Producer Price Index. 
A) GDP Inflator. 
B) Consumer Price Index. 
C) Personal Consumption Expenditures. 
D) Producer Price Index.

Question 5

Fiat money is

Accepted Answer

A) money that has value because of government law or regulation. 
B) money because it is backed by gold or silver. 
C) money because of tradition and acceptance. 
D) counterfeit money. 
A) money that has value because of government law or regulation. 
B) money because it is backed by gold or silver. 
C) money because of tradition and acceptance. 
D) counterfeit money.

Question 6

If the Consumer Price Index in year 1 was 131 and the rate of inflation was 6.1% what is the Consumer Price Index in year 2?

Accepted Answer

A) 7.86 
B) 123.5 
C) 139 
D) 209.6 
A) 7.86 
B) 123.5 
C) 139 
D) 209.6

Question 7

Purchasing power

Accepted Answer

A) reflects the number of goods and services that can be acquired with a given amount of money. 
B) reflects the dollar value of goods and services purchased. 
C) reflects the increase of prices for goods and services. 
D) reflects the change in consumption patterns. 
A) reflects the number of goods and services that can be acquired with a given amount of money. 
B) reflects the dollar value of goods and services purchased. 
C) reflects the increase of prices for goods and services. 
D) reflects the change in consumption patterns.

Question 8

When inflation occurs, money saved ____________ its purchasing power and becomes a poor ____________.

Accepted Answer

A) gains in; unit of value 
B) loses; unit of value 
C) gains in; store of value 
D) loses; store of value 
A) gains in; unit of value 
B) loses; unit of value 
C) gains in; store of value 
D) loses; store of value

Question 9

You have been offered two jobs in two different cities.The jobs are very similar in description.The first job offer is in Denver, Colorado at an annual salary of $52,000.The second job offer is for a job in Chicago, Illinois at an annual salary of $60,000.The cost of living index for Denver is 115 and 135 for Chicago.Which position will provide you the greater purchasing power?

Accepted Answer

Denver; the real income for the position

Question 10

You are attending the same University where your grandparents attended and have just landed a job at a local retail store when your Grandfather also worked in 1972.You accept the position for a t wage of $10.00 per hour.Your Grandfather's wage was $2.37 per hour.The CPI in 1972 was 41.8 and is 230.21 today.Real income between 1972 and today has

Accepted Answer

A) increased. 
B) decreased. 
C) stayed the same. 
D) fluctuated. 
A) increased. 
B) decreased. 
C) stayed the same. 
D) fluctuated.

Question 11

Providing a common measure of the worth of a good is money's role as a

Accepted Answer

A) unit of account. 
B) store of value. 
C) medium of exchange. 
D) unit of standard. 
A) unit of account. 
B) store of value. 
C) medium of exchange. 
D) unit of standard.

Question 12

If an economy is at Point a as illustrated, which of the following can be expected?

Accepted Answer

A) Demand-push inflation 
B) Demand-pull inflation 
C) Cost-push inflation 
D) Cost-pull inflation 
A) Demand-push inflation 
B) Demand-pull inflation 
C) Cost-push inflation 
D) Cost-pull inflation

Question 13

When money is used to purchase a good or service it is serving the role of a

Accepted Answer

A) unit of account. 
B) store of value. 
C) medium of exchange. 
D) unit of standard. 
A) unit of account. 
B) store of value. 
C) medium of exchange. 
D) unit of standard.

Question 14

Cost-push inflation can be caused by

Accepted Answer

A) an increase in government spending. 
B) an increase in a source of raw material. 
C) a change in aggregate demand. 
D) the supply side of the market. 
A) an increase in government spending. 
B) an increase in a source of raw material. 
C) a change in aggregate demand. 
D) the supply side of the market.

Question 15

All of the following can be identifies as a source of inflation except

Accepted Answer

A) aggregate demand. 
B) aggregate supply. 
C) increases in the money supply. 
D) decreases in the money supply. 
A) aggregate demand. 
B) aggregate supply. 
C) increases in the money supply. 
D) decreases in the money supply.

Question 16

A nominal quantity is one that is measured

Accepted Answer

A) using the GDP deflator. 
B) in current dollar value. 
C) in physical, or constant, terms. 
D) using the CPI. 
A) using the GDP deflator. 
B) in current dollar value. 
C) in physical, or constant, terms. 
D) using the CPI.

Question 17

When you use money to compare value it is used as

Accepted Answer

A) a store of value. 
B) a medium of exchange. 
C) a unit of account. 
D) a unit of standard. 
A) a store of value. 
B) a medium of exchange. 
C) a unit of account. 
D) a unit of standard.

Question 18

This type of inflation is a result of decreases in aggregate supply.

Accepted Answer

A) Hyperinflation 
B) Cost-push 
C) Stagflation 
D) Demand-pull 
A) Hyperinflation 
B) Cost-push 
C) Stagflation 
D) Demand-pull

Question 19

A quantity identified in constant terms is called a _______________ quantity.

Accepted Answer

A) real value 
B) nominal value 
C) marginal value 
D) face value 
A) real value 
B) nominal value 
C) marginal value 
D) face value

Question 20

Using money earned today for future purchases is money's role as a

Accepted Answer

A) unit of account. 
B) store of value. 
C) medium of exchange. 
D) unit of standard. 
A) unit of account. 
B) store of value. 
C) medium of exchange. 
D) unit of standard.

Exam 7: Inflation and the Measurement of Prices

You receive a raise of 3% at work.The rate of inflation is reported to be 5%.

A price level of 120 means that prices have

_____________________ will benefit from inflation.

The most widely used measure for tracking prices in the United States is the

Fiat money is

If the Consumer Price Index in year 1 was 131 and the rate of inflation was 6.1% what is the Consumer Price Index in year 2?

Purchasing power

When inflation occurs, money saved ____________ its purchasing power and becomes a poor ____________.

Providing a common measure of the worth of a good is money's role as a

If an economy is at Point a as illustrated, which of the following can be expected?

When money is used to purchase a good or service it is serving the role of a

Cost-push inflation can be caused by

All of the following can be identifies as a source of inflation except

A nominal quantity is one that is measured

When you use money to compare value it is used as

This type of inflation is a result of decreases in aggregate supply.

A quantity identified in constant terms is called a _______________ quantity.

Using money earned today for future purchases is money's role as a

An Introduction to the Economic Way of Thinking

Production Possibilities

Demand Supply

Consumer Surplus, Producer Surplus, and Economic Efficiency

Elasticity

Measuring Economic Activity

The Power and Limits of Markets

Wage Determination and Superstar Salaries

The Minimum Wage

International Trade of Goods

Immigration and the International Trade of Labor

Foreign Exchange and the International Trade of Money

Farm Policy

The Economics of Illegal Drugs

Pollution, the Environment, and Global Warming

The Economics of Education

Competition and Monopoly

The Economics of Labor Market Discrimination

Poverty and the Distribution of Income

The Economics of Health Care

Monetary Policy and the Federal Reserve

Fiscal Policy and the Federal Budget

Filters

When inflation occurs, money saved its purchasing power and becomes a poor .