A) are easily accounted for in the consumer price index (CPI). B) are always included in the CPI. C) are included in the gross domestic product (GDP) deflator but not the CPI. D) are generally included in both the CPI and the GDP deflator. E) are at least partially adjusted for in the CPI. A) are easily accounted for in the consumer price index (CPI). B) are always included in the CPI. C) are included in the gross domestic product (GDP) deflator but not the CPI. D) are generally included in both the CPI and the GDP deflator. E) are at least partially adjusted for in the CPI.

A) automatically implies that, on average, everyone is better off because prices have fallen. B) is the same as disinflation; it means the rate of inflation has fallen. C) will make you better off if your nominal wages fall more slowly than prices. D) will make you better off if your nominal wages fall more rapidly than prices. E) will make you better off if your real wages fall more rapidly than prices. A) automatically implies that, on average, everyone is better off because prices have fallen. B) is the same as disinflation; it means the rate of inflation has fallen. C) will make you better off if your nominal wages fall more slowly than prices. D) will make you better off if your nominal wages fall more rapidly than prices. E) will make you better off if your real wages fall more rapidly than prices.

Exam 8: The Price Level and Inflation

Refer to the following table to answer the next four questions: -As presented in the table,the rate of inflation (or deflation) from 2002-2003 was (rounded to two decimal places):

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(Multiple Choice)

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Question 1

Correct Answer:

Verified

As a business owner,you find that your resource prices are increasing often.Because these costs are rising,you find it necessary to change your prices frequently.This best describes:

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(Multiple Choice)

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Question 2

Correct Answer:

Verified

Describe the methodology of finding the consumer price index (CPI).

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(Essay)

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Question 3

Correct Answer:

Verified

The prices of 8,000 goods are measured in 38 geographic locations.These are the prices for common items that a typical consumer would buy.Each of these goods is given a weighted average,which means that those goods that represent a larger percentage of the market basket,such as housing,count more (are weighted more heavily) than others,such as clothing,that count less.

Milton Friedman,who won the Nobel Prize in Economics,characterized inflation as being "high and variable." These characteristics of inflation create problems because:

(Multiple Choice)

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Question 4

Michael Chang buys only tennis rackets during a particular year.During the year in question,the price of all goods rises by 10% on average,but the price of tennis rackets remains the same.Which statement is correct?

(Multiple Choice)

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Question 5

Quality changes:

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Question 6

If your nominal wage rises but you think that it automatically means your real wage rose,then:

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Question 7

Deflation:

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Question 8

In Felixania,cat food constitutes 45% of the typical basket of goods for a typical consumer,dog food constitutes 3%,and all other goods constitute the remaining 52%.Assume the price of cat food rises by 4%,the price of dog food falls by 10%,and prices remain constant for all other goods.Based on the information given,we can definitely say:

(Multiple Choice)

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Question 9

You are offered two jobs,one in Richmond,Virginia,paying $67,000,and one in San Diego,California,paying $79,000.The price index in Richmond is 104.5,and in San Diego it is 132.3.If real wages are the only consideration,then:

(Multiple Choice)

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Question 10

Oranges become more expensive in 2008 at Ukrop's in Charlottesville,Virginia.This means:

(Multiple Choice)

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Question 11

According to the price confusion problem,if the price of a product increases,then:

(Multiple Choice)

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Question 12

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

(Multiple Choice)

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Question 13

If 51% of all goods in the consumer price index (CPI) became more expensive and 49% became cheaper:

(Multiple Choice)

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Question 14

If everyone buys the same goods every year and the price of housing rises by 38%:

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Question 15

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

(Multiple Choice)

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Question 16

If housing prices increase by 25% and the price of all other goods decreases by 22%,then:

(Multiple Choice)

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Question 17

The average inflation rate in the United States from 2000-2012 was about:

(Multiple Choice)

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Question 18

In the 1970s,the government attempted to regulate prices to control inflation; this attempt was unsuccessful.The most likely reason was that:

(Multiple Choice)

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Question 19

Refer to the following figure when answering the next five questions: -Based on the figure,and if we define inflation as being "under control" at rates less than 10%,when was inflation under control?

(Multiple Choice)

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Question 20

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Refer to the following table to answer the next four questions: -As presented in the table,the rate of inflation (or deflation) from 2002-2003 was (rounded to two decimal places):

As a business owner,you find that your resource prices are increasing often.Because these costs are rising,you find it necessary to change your prices frequently.This best describes:

Describe the methodology of finding the consumer price index (CPI).

Milton Friedman,who won the Nobel Prize in Economics,characterized inflation as being "high and variable." These characteristics of inflation create problems because:

Michael Chang buys only tennis rackets during a particular year.During the year in question,the price of all goods rises by 10% on average,but the price of tennis rackets remains the same.Which statement is correct?

Quality changes:

If your nominal wage rises but you think that it automatically means your real wage rose,then:

Deflation:

You are offered two jobs,one in Richmond,Virginia,paying $67,000,and one in San Diego,California,paying $79,000.The price index in Richmond is 104.5,and in San Diego it is 132.3.If real wages are the only consideration,then:

Oranges become more expensive in 2008 at Ukrop's in Charlottesville,Virginia.This means:

According to the price confusion problem,if the price of a product increases,then:

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

If 51% of all goods in the consumer price index (CPI) became more expensive and 49% became cheaper:

If everyone buys the same goods every year and the price of housing rises by 38%:

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

If housing prices increase by 25% and the price of all other goods decreases by 22%,then:

The average inflation rate in the United States from 2000-2012 was about:

In the 1970s,the government attempted to regulate prices to control inflation; this attempt was unsuccessful.The most likely reason was that:

Refer to the following figure when answering the next five questions: -Based on the figure,and if we define inflation as being "under control" at rates less than 10%,when was inflation under control?

The Five Foundations of Economics

Model Building and Gains From Trade

The Market at Work: Supply and Demand

Price Controls

The Efficiency of Markets and the Costs of Taxation

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

The Great Recession, the Great Depression, and Great Macroeconomic Debates

Federal Budgets: the Tools of Fiscal Policy

Fiscal Policy

Money and the Federal Reserve

Monetary Policy

International Trade

International Finance

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