Question 1

Inflation is not a problem

Accepted Answer

A)  if it is under 15 percent, as it usually is in the United States. 
B)  if salaries rise at a slower rate than inflation. 
C)  if the prices of some goods fall even though the prices of others might be rising. 
D)  except that when it occurs, it creates uncertainty over future prices along with other possible deleterious effects). 
E)  and is not preferred when compared to deflation. 
A)  if it is under 15 percent, as it usually is in the United States. 
B)  if salaries rise at a slower rate than inflation. 
C)  if the prices of some goods fall even though the prices of others might be rising. 
D)  except that when it occurs, it creates uncertainty over future prices along with other possible deleterious effects). 
E)  and is not preferred when compared to deflation.

Question 2

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

Accepted Answer

A)  Bureau of Economic Analysis. 
B)  Bureau of Labor Statistics. 
C)  Economic Adjustment Agency. 
D)  Department of Commerce Price Index Office. 
E)  Department of Vital Statistics. 
A)  Bureau of Economic Analysis. 
B)  Bureau of Labor Statistics. 
C)  Economic Adjustment Agency. 
D)  Department of Commerce Price Index Office. 
E)  Department of Vital Statistics.

Question 3

The equation M * V = P * Y is called the

Accepted Answer

A)  price-demand equation. 
B)  money-price equation. 
C)  equation of exchange. 
D)  equation of currency. 
E)  money velocity equation. 
A)  price-demand equation. 
B)  money-price equation. 
C)  equation of exchange. 
D)  equation of currency. 
E)  money velocity equation.

Question 4

Explain how to calculate the inflation rate as a percentage, and how to interpret it.

Accepted Answer

The equation used is @#IMG-DLM& where P₁ and P₂ ar

Question 5

If nominal income increases, then real income

Accepted Answer

A)  increases. 
B)  increases if the price index falls. 
C)  increases if the percent increase in price index rises by more than the percent change in nominal income. 
D)  increases if you buy only the goods included in the consumer price index CPI) and the majority of those goods get cheaper. 
E)  decreases. 
A)  increases. 
B)  increases if the price index falls. 
C)  increases if the percent increase in price index rises by more than the percent change in nominal income. 
D)  increases if you buy only the goods included in the consumer price index CPI) and the majority of those goods get cheaper. 
E)  decreases.

Question 6

You get a pay raise and feel richer even though your raise did not keep up with inflation; this is best described as

Accepted Answer

A)  menu costs. 
B)  price confusion. 
C)  future price uncertainty. 
D)  money illusion. 
E)  nominal income uncertainty. 
A)  menu costs. 
B)  price confusion. 
C)  future price uncertainty. 
D)  money illusion. 
E)  nominal income uncertainty.

Question 7

Arguably, the increases in housing prices in 2005-2006 caused

Accepted Answer

A)  a menu cost problem for producers. 
B)  a price confusion problem for producers. 
C)  a money illusion problem for producers. 
D)  future price uncertainty for producers. 
E)  a money illusion problem for consumers. 
A)  a menu cost problem for producers. 
B)  a price confusion problem for producers. 
C)  a money illusion problem for producers. 
D)  future price uncertainty for producers. 
E)  a money illusion problem for consumers.

Question 8

Assume tuition and fees at North Carolina State University cost $4,259 in 2004 and $7,787 in 2012. If the price index was 184 in 2004 and 226 in 2012, then we could say

Accepted Answer

A)  tuition has increased more slowly than inflation. 
B)  tuition has increased more rapidly than inflation. 
C)  tuition has increased at about the same rate as inflation. 
D)  nominal tuition has decreased. 
E)  tuition suffers from money illusion due to inflation. 
A)  tuition has increased more slowly than inflation. 
B)  tuition has increased more rapidly than inflation. 
C)  tuition has increased at about the same rate as inflation. 
D)  nominal tuition has decreased. 
E)  tuition suffers from money illusion due to inflation.

Question 9

The website that provides official inflation statistics is

Accepted Answer

A)  HYPERLINK "http://www.econstats.com/" www.econstats.com. 
B)  HYPERLINK "http://www.bls.gov/" www.bls.gov. 
C)  HYPERLINK "http://www.bea.gov/" www.bea.gov. 
D)  HYPERLINK "http://www.inflation.gov/" www.inflation.gov. 
E)  HYPERLINK "http://www.econometrics.com/" www.econometrics.com. 
A)  HYPERLINK "http://www.econstats.com/" www.econstats.com. 
B)  HYPERLINK "http://www.bls.gov/" www.bls.gov. 
C)  HYPERLINK "http://www.bea.gov/" www.bea.gov. 
D)  HYPERLINK "http://www.inflation.gov/" www.inflation.gov. 
E)  HYPERLINK "http://www.econometrics.com/" www.econometrics.com.

Question 10

The main drawback of the chained consumer price index CPI) compared to the traditional CPI is that the chained CPI

Accepted Answer

A)  only includes final goods and services. 
B)  is not updated as frequently. 
C)  is more difficult to calculate. 
D)  underestimates true inflation. 
E)  overestimates true inflation. 
A)  only includes final goods and services. 
B)  is not updated as frequently. 
C)  is more difficult to calculate. 
D)  underestimates true inflation. 
E)  overestimates true inflation.

Question 11

If the price index in 1922 was 17 and a unit of Nabisco Oreo cookies cost $0.32, and if the price index today is 220 and a unit of Nabisco Oreo cookies costs $2.99, then the inflation-adjusted price of Oreos today is

Accepted Answer

A)  almost exactly the same within 10 percent) as in 1922. 
B)  much higher twice or more) than in 1922. 
C)  much lower half or less) than in 1922. 
D)  a bit higher than in 1922. 
E)  a bit lower than in 1922. 
A)  almost exactly the same within 10 percent) as in 1922. 
B)  much higher twice or more) than in 1922. 
C)  much lower half or less) than in 1922. 
D)  a bit higher than in 1922. 
E)  a bit lower than in 1922.

Question 12

Deflation is best described as when

Accepted Answer

A)  all prices in the economy fall. 
B)  the prices of some goods rise and prices of some goods fall, but more goods have price increases than decreases. 
C)  the prices of some goods rise and prices of some goods fall, but fewer goods have price increases than decreases. 
D)  the overall level of prices of goods falls. 
E)  the overall level of prices of goods rises. 
A)  all prices in the economy fall. 
B)  the prices of some goods rise and prices of some goods fall, but more goods have price increases than decreases. 
C)  the prices of some goods rise and prices of some goods fall, but fewer goods have price increases than decreases. 
D)  the overall level of prices of goods falls. 
E)  the overall level of prices of goods rises.

Question 13

Arguably there are three reasons why the consumer price index CPI) overstates inflation. List the reasons and explain each one.

Accepted Answer

Substitution: Consumers do not buy the s

Question 14

Assume the price of salt increased from $0.30 in 1985 to $0.50 in 1995. If we calculate the average rate of price increase for salt over this period, we could accurately say the

Accepted Answer

A)  price of salt increased at about a 40 percent rate per year during this period. 
B)  price of salt increased at about a 20 percent rate per year during this period. 
C)  price of salt increased by about 20 percent total during this period. 
D)  price of salt increased at about a 5 percent rate per year during this period. 
E)  real price of salt definitely increased during the period. 
A)  price of salt increased at about a 40 percent rate per year during this period. 
B)  price of salt increased at about a 20 percent rate per year during this period. 
C)  price of salt increased by about 20 percent total during this period. 
D)  price of salt increased at about a 5 percent rate per year during this period. 
E)  real price of salt definitely increased during the period.

Question 15

Which statement best represents the purpose for measuring annual inflation or deflation)?

Accepted Answer

A)  The main purpose is to find out how much the price of gasoline has increased from year to year. 
B)  The main purpose is to find out whether more goods have increased or decreased) in price compared to the number of goods whose price has decreased or increased). 
C)  The main purpose is to find out whether the overall cost of living has changed. 
D)  The main purpose is to find out whether the economy has produced more goods this year than last year. 
E)  The main purpose is to find out whether the cost of entertainment is more expensive or cheaper) this year than last year. 
A)  The main purpose is to find out how much the price of gasoline has increased from year to year. 
B)  The main purpose is to find out whether more goods have increased or decreased) in price compared to the number of goods whose price has decreased or increased). 
C)  The main purpose is to find out whether the overall cost of living has changed. 
D)  The main purpose is to find out whether the economy has produced more goods this year than last year. 
E)  The main purpose is to find out whether the cost of entertainment is more expensive or cheaper) this year than last year.

Question 16

Refer to the following figure to answer the next four questions:
  
-Based on the figure, one could correctly state that

Accepted Answer

A)  although U.S. inflation was generally higher in the 1970s and 1980s, that situation was reversed in the later years for the European Union. 
B)  inflation in both the United States and the European Union was higher in the 1990s than it was in the 1970s and 1980s. 
C)  deflation was a problem in the United States and the European Union in the 1990s, but inflation was a problem for both in the 1970s and 1980s. 
D)  U.S. and E.U. inflation both tended to be higher in the 1970s and 1980s than in the 1990s. 
E)  typically, while the European Union had inflation problems, the United States had deflation problems. 
A)  although U.S. inflation was generally higher in the 1970s and 1980s, that situation was reversed in the later years for the European Union. 
B)  inflation in both the United States and the European Union was higher in the 1990s than it was in the 1970s and 1980s. 
C)  deflation was a problem in the United States and the European Union in the 1990s, but inflation was a problem for both in the 1970s and 1980s. 
D)  U.S. and E.U. inflation both tended to be higher in the 1970s and 1980s than in the 1990s. 
E)  typically, while the European Union had inflation problems, the United States had deflation problems.

Question 17

The chained consumer price index CPI) tends to be

Accepted Answer

A)  a better measure of prices than the traditional CPI, no matter what the circumstances. 
B)  a better measure of prices than the traditional CPI, but only if inflation is relatively high. 
C)  a better measure of prices than the traditional CPI, but only if inflation is relatively low. 
D)  equally as good as the traditional CPI, under all conditions. 
E)  a poor measure of prices but better than the gross domestic product GDP) deflator. 
A)  a better measure of prices than the traditional CPI, no matter what the circumstances. 
B)  a better measure of prices than the traditional CPI, but only if inflation is relatively high. 
C)  a better measure of prices than the traditional CPI, but only if inflation is relatively low. 
D)  equally as good as the traditional CPI, under all conditions. 
E)  a poor measure of prices but better than the gross domestic product GDP) deflator.

Question 18

In the equation M * V = P* Y, the variable M stands for the

Accepted Answer

A)  median rate of inflation. 
B)  movement of goods. 
C)  movement of prices. 
D)  quantity of money. 
E)  velocity of money. 
A)  median rate of inflation. 
B)  movement of goods. 
C)  movement of prices. 
D)  quantity of money. 
E)  velocity of money.

Question 19

Education typically composes about ______of the consumer price index( CPI).

Accepted Answer

A)  3 percent 
B)  5 percent 
C)  10 percent 
D)  15 percent 
E)  20 percent 
A)  3 percent 
B)  5 percent 
C)  10 percent 
D)  15 percent 
E)  20 percent

Question 20

How do you convert a price of a good from an earlier time into today's price?

Accepted Answer

A)  Take the earlier price and divide by today's price, then multiply by the ratio of the consumer price index CPI) today to that of the CPI in the old year. 
B)  Take the earlier price and multiply by the ratio of the earlier gross domestic product GDP) deflator to today's consumer price index. 
C)  Take today's price and divide by the earlier price in terms of the gross domestic product GDP) deflator. 
D)  Take the earlier price and multiply by the ratio of today's consumer price index CPI) to the earlier CPI. 
E)  Take the earlier price and multiply by the ratio of the earlier consumer price index CPI) to the current CPI. 
A)  Take the earlier price and divide by today's price, then multiply by the ratio of the consumer price index CPI) today to that of the CPI in the old year. 
B)  Take the earlier price and multiply by the ratio of the earlier gross domestic product GDP) deflator to today's consumer price index. 
C)  Take today's price and divide by the earlier price in terms of the gross domestic product GDP) deflator. 
D)  Take the earlier price and multiply by the ratio of today's consumer price index CPI) to the earlier CPI. 
E)  Take the earlier price and multiply by the ratio of the earlier consumer price index CPI) to the current CPI.

Inflation is not a problem

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

The equation M * V = P * Y is called the

Explain how to calculate the inflation rate as a percentage, and how to interpret it.

If nominal income increases, then real income

You get a pay raise and feel richer even though your raise did not keep up with inflation; this is best described as

Arguably, the increases in housing prices in 2005-2006 caused

Assume tuition and fees at North Carolina State University cost $4,259 in 2004 and $7,787 in 2012. If the price index was 184 in 2004 and 226 in 2012, then we could say

The website that provides official inflation statistics is

The main drawback of the chained consumer price index CPI) compared to the traditional CPI is that the chained CPI

If the price index in 1922 was 17 and a unit of Nabisco Oreo cookies cost $0.32, and if the price index today is 220 and a unit of Nabisco Oreo cookies costs $2.99, then the inflation-adjusted price of Oreos today is

Deflation is best described as when

Arguably there are three reasons why the consumer price index CPI) overstates inflation. List the reasons and explain each one.

Assume the price of salt increased from $0.30 in 1985 to $0.50 in 1995. If we calculate the average rate of price increase for salt over this period, we could accurately say the

Which statement best represents the purpose for measuring annual inflation or deflation)?

Refer to the following figure to answer the next four questions: -Based on the figure, one could correctly state that

The chained consumer price index CPI) tends to be

In the equation M * V = P* Y, the variable M stands for the

Education typically composes about ______of the consumer price index( CPI).

How do you convert a price of a good from an earlier time into today's price?

Five Foundations of Economics

Model Building and Gains From Trade

The Market at Work: Supply and Demand Y

Market Outcomes and Tax Incidence

Price Controls

Introduction to Macroeconomics and Gross Domestic Product

Unemployment

Savings, Interest Rates, and the Market for Loanable Funds

Financial Markets and Securities

Economic Growth and the Wealth of Nations

Growth Theory

The Aggregate Demandaggregate Supply Model

Recessions, Expansions, and the Debate Over How to Manage Them

Federal Budgets: the Tools of Fiscal Policy

Fiscal Policy

Money and the Federal Reserve

Monetary Policy

International Trade

International Finance

Filters

Exam 8: The Price Level and Inflation

Inflation is not a problem

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

The equation M * V = P * Y is called the

Explain how to calculate the inflation rate as a percentage, and how to interpret it.

If nominal income increases, then real income

You get a pay raise and feel richer even though your raise did not keep up with inflation; this is best described as

Arguably, the increases in housing prices in 2005-2006 caused

Assume tuition and fees at North Carolina State University cost $4,259 in 2004 and $7,787 in 2012. If the price index was 184 in 2004 and 226 in 2012, then we could say

The website that provides official inflation statistics is

The main drawback of the chained consumer price index CPI) compared to the traditional CPI is that the chained CPI

If the price index in 1922 was 17 and a unit of Nabisco Oreo cookies cost $0.32, and if the price index today is 220 and a unit of Nabisco Oreo cookies costs $2.99, then the inflation-adjusted price of Oreos today is

Deflation is best described as when

Arguably there are three reasons why the consumer price index CPI) overstates inflation. List the reasons and explain each one.

Assume the price of salt increased from $0.30 in 1985 to $0.50 in 1995. If we calculate the average rate of price increase for salt over this period, we could accurately say the

Which statement best represents the purpose for measuring annual inflation or deflation)?

Refer to the following figure to answer the next four questions: -Based on the figure, one could correctly state that

The chained consumer price index CPI) tends to be

In the equation M * V = P* Y, the variable M stands for the

Education typically composes about ______of the consumer price index( CPI).

How do you convert a price of a good from an earlier time into today's price?

Five Foundations of Economics

Model Building and Gains From Trade

The Market at Work: Supply and Demand Y

Market Outcomes and Tax Incidence

Price Controls

Introduction to Macroeconomics and Gross Domestic Product

Unemployment

Savings, Interest Rates, and the Market for Loanable Funds

Financial Markets and Securities

Economic Growth and the Wealth of Nations

Growth Theory

The Aggregate Demandaggregate Supply Model

Recessions, Expansions, and the Debate Over How to Manage Them

Federal Budgets: the Tools of Fiscal Policy

Fiscal Policy

Money and the Federal Reserve

Monetary Policy

International Trade

International Finance

Filters