Exam 18: Measuring the Price Level and Inflation

If workers received a 5 percent wage increase and the rate of inflation was 10 percent, then their real wage:

Inflation makes it difficult to distinguish relative price changes from changes in the general level of prices. Consequently, inflation ________ the efficiency of the market system.

The Fisher effect is the tendency for ________ interest rates to be ________ when inflation is high.

The real interest rate equals the:

The CPI is all of the following EXCEPT the:

The price of a specific good in comparison to the prices of other goods and services is called:

If the nominal interest rate is 8 percent and the real interest rate is 3 percent, then the inflation rate equals:

In Econoland in 2005, people with incomes between $20,000 and $30,000 paid 12 percent of their income in taxes and people with incomes between $30,001 and $40,000 paid 15 percent. In 2005, the CPI in Econoland equaled 1.20, and it increased to 1.26 in 2006. If the government of Econoland wants to keep households with a given real income from being pushed up into a higher tax bracket by inflation, the $20,000-to-$30,000 bracket will be changed in 2006 to:

Which of the following is a nominal quantity?

Product improvements make it difficult for the statisticians who construct the CPI to distinguish between ________ changes and ________ changes.

The phenomenon known as ________ occurs when inflation causes people to pay an increasing percentage of their income in taxes even when their real incomes have not changed.

The CPI in 1931 equaled 0.15. The CPI in 1932 equaled 0.14. The rate of inflation between 1931 and 1932 was ________ percent.

Indexing is the process of:

A price index measures:

For a given nominal interest rate, an unexpectedly high inflation rate ________ the real interest rate.

Suppose the CPI does indeed overstate the inflation rate. When the CPI increases by 5 percent and household incomes increase by 5 percent, we should conclude that real incomes of households have:

If the CPI equaled 1.43 in 2008 and 1.56 in 2009, then between 2008 and 2009 there was:

If the borrower and lender agree to a loan at 8 percent when the inflation rate is 3 percent, then 8 percent is the ________ interest rate and 5 percent is the ________ interest rate.

The CPI in year one equaled 1.55. The CPI in year two equaled 1.64. The rate of inflation between years one and two was ________ percent.

If the total expenditures of a typical family equaled $35,000 per year in 2015 and the exact same basket of goods and services cost $40,000 in the year 2017, the family's cost of living: