Exam 18: Measuring the Price Level and Inflation

If the total expenditures of a typical family equaled $40,000 per year in 2015 and the exact same basket of goods and services cost $45,000 in the year 2017, the family's cost of living:

The real costs of inflation to society include:

The quality adjustment bias of the CPI refers to the failure of statisticians to:

The real wage is the wage:

A measure of the average price of a given class of goods or services relative to the price of the same goods and services in a base year is called a:

To ensure that a nominal payment represents a constant level of purchasing power over time, one should:

The annual percentage increase in the purchasing power of a financial asset is called the:

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

The extra costs incurred to avoid holding cash when there is inflation are called the:

A college graduate in 1972 found a job paying $7,200. The CPI was 0.418 in 1972. A college graduate in 2016 found a job paying $35,000. The CPI was 2.40 in 2016. The 1972 graduate's job paid ________ in nominal terms and ________ in real terms than the 2016 graduate's job.

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

Inflation reduces economic efficiency because it does each of the following except:

If a borrower and lender agree to an interest rate on a loan when inflation is expected to be 7 percent and inflation turns out to be 10 percent over the life of the loan, then the borrower ________ and the lender ________.

The annual percentage rate of change in the price level is the:

The CPI equals 1.00 in year one and 1.15 in year two. If the nominal wage is $15 in year one and a contract calls for the wage to be indexed to the CPI, what will be the nominal wage in year two?

A labor contract provides for a first-year wage of $15 per hour, and specifies that the real wage will rise by 2 percent in the second year of the contract. The CPI is 1.00 in the first year and 1.09 in the second year. What dollar wage must be paid in the second year?

As the rate of inflation increases, the increased cost to a consumer of more frequent trips to the bank to make cash withdrawals represents an increase in the:

A real quantity is a quantity measured:

If the real interest rate is 3 percent and the inflation rate is 7 percent, then the nominal interest rate equals:

Hyperinflation is: