Exam 5: Measuring Economic Activity: Gdp and Unemployment

The CPI in year one equaled 1.45. The CPI in year two equaled 1.51. The rate of inflation between years one and two was ______ percent.

The shoe leather costs of inflation include all of the following EXCEPT:

Hyperinflation is:

The substitution bias in the CPI refers to the failure of statisticians to:

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?

The consumer price index for the current year measures the cost of a standard basket in the ______ year relative to the cost of the same basket in the ______ year.

In Econoland in 2000, people with incomes between $20,000 and $30,000 paid 12% of their income in taxes and people with incomes between $30,001 and $40,000 paid 15%. In 2000, the CPI in Econoland equaled 1.20, and it increased to 1.26 in 2001. 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 2001 to:

A consumer expenditure survey reports the following information on consumer protein spending: 2005 2006 Price Quantity Price Quantity Fish \ 5 1 \ 7 7 Chicken \ 3 10 \ 4 12 Beef \ 6 7 \ 5 10 Using 2005 as the base year, by how much does a "cost of protein" index increase between 2005 and 2006?

If the annual real rate on a 10-year inflation-protected bond equals 1.9 percent and the annual nominal rate of return on a 10-year bond without inflation protection is 4.4 percent, what average rate of inflation over the ten years would make holders of inflation-protected bonds and holders of bonds without inflation protection equally well off?

The real rate of return on holding cash is equal to:

One family earned an income of $28,000 in 1990. Over the next five years, their income increased by 15%, while the CPI increased by 15%. After five years, this family's nominal income ______, and their real income ______.

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

The "true" costs of inflation to an economy include all of the following EXCEPT:

Inflation ______ the signals sent by price changes to demanders and suppliers of goods and services.

If workers received a 5 percent wage increase and the rate of inflation was 3 percent, then their real wage:

Making more frequent, but smaller cash withdrawals from banks ______ the inflation losses from holding cash and ______ the shoe leather costs of inflation.

When inflation turns out to be different from what was expected, purchasing power is ______.

Suppose that the price of chicken rises sharply compared to the price of turkey. In response, consumers buy more turkey and less chicken than they did in the CPI base year. In this situation the CPI will tend to ______ inflation as a result of ______ bias.

The real interest rate equals the:

The tendency for nominal interest rates to be high when inflation is high and low when inflation is low is known as: