Exam 11: Measuring the Cost of Living: Correcting Economic Variables for the Effects of Inflation

Consternation Corporation has an agreement with its workers to index completely the wage of its employees using the CPI.Consternation Corporation currently pays its production line workers $7.50 an hour and is scheduled to index their wages today.If the CPI is currently 130 and was 125 a year ago,the firm should increase the hourly wages of its workers by

Pauline is offered a Job in Minneapolis that pays $80,000.She is offered a similar job in Louisville that pays $71,200.Which pair of CPIs would ensure that the two salaries have the same purchasing power?

If the nominal interest rate is 4 percent and the real interest rate is -2.5 percent,then the inflation rate is

If the CPI was 90 in 1975 and is 225 today,then $100 today purchases the same amount of goods and services as

When box office receipts are corrected for inflation,the most popular movie of all time is

In 1949,Sycamore,Illinois built a hospital for about $500,000.In 1987,the county restored the courthouse for about $2.4 million.A price index for nonresidential construction was 14 in 1949,92 in 1987,and 114.5 in 2000.According to these numbers,the hospital cost about

Which of the following statements is correct about the relationship between inflation and interest rates?

Arlo is offered a job in Des Moines,where the CPI is 60,and a job in New York,where the CPI is 125.Arlo's job offer in Des Moines is for $48,000.How much does the New York job have to pay in order for the two salaries to represent the same purchasing power?

Scenario 24-4 Quinn has job offers in Wrexington and across the country in Charlieville.The Wrexington job would pay a salary of $50,000 per year,and the Charlieville job would pay a salary of $40,000 per year.The CPI in Wrexington is 150,and the CPI in Charlieville is 90. -Refer to Scenario 24-4.The Wrexington salary in Charlieville dollars is

Which of the following is correct?

Rosa deposits $100 in a bank account that pays an annual interest rate of 20 percent.A year later,after Rosa has accumulated $20 in interest,she withdraws her $120.Rosa's purchasing power

The real interest rate tells you

Consternation Corporation has an agreement with its workers to index completely the wage of its employees using the CPI.Consternation Corporation currently pays its production line workers $8.00 an hour and is scheduled to index their wages today.If the CPI is currently 160 and was 128 a year ago,the firm should increase the hourly wages of its workers by

If the nominal interest rate is 5 percent and the real interest rate is 7 percent,then the inflation rate is

If the CPI was 127 in 1972 and is 324 today,then $10 in 1972 purchased the same amount of goods and services as

Sophia puts money in the bank and earns a 5 percent nominal interest rate.If the inflation rate is 2 percent,then after one year,

In 1969,Malcolm bought a Pontiac Firebird for $2,500.If the price index was 36.7 in 1969 and the price index was 235 in 2013,then what is the price of the Firebird in 2013 dollars?

As long as prices are rising over time,then

If the nominal interest rate is 4.2 percent and the rate of inflation is -0.5 percent,then the real interest rate is

Corey deposits $1,000 in a savings account that pays an annual interest rate of 5 percent.Over the course of a year,the inflation rate is 1.7 percent.At the end of the year,Corey has