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

Ethel purchased a bag of groceries in 1970 for $8.She purchased the same bag of groceries in 2006 for $25.If the price index was 38.8 in 1970 and the price index was 180 in 2006,then what is the price of the 1970 bag of groceries in 2006 dollars?

If the nominal interest rate is 9 percent and the real interest rate is 3 percent,then the inflation rate is

In 1986,Ken bought a Ford Mustang for $8,000.If the price index was 122 in 1986 and the price index was 280 in 2011,then what is the price of the Mustang in 2011 dollars?

David earned a salary of $43,500 in 1994 and $89,000 in 2010.The consumer price index was 148.2 in 1994 and 215.3 in 2010.David's 1994 salary in 2010 dollars is

Suppose the consumer price index was 184 in 2009 and 198.17 in 2010.The nominal interest rate during this period was 5.8 percent.What was the real interest rate during this period?

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 Charlieville salary in Wrexington dollars is

If the nominal interest rate is 5 percent,and the rate of inflation is 3 percent,then the real interest rate is equal to

You know that a candy bar cost five cents in 1962.You also know the CPI for 1962 and the CPI for today.Which of the following would you use to compute the price of the candy bar in today's prices?

Suppose that over the past year,the real interest rate was 3 percent,the CPI was 126.2 at the beginning of the year,and the CPI was 129.5 at the end of the year.It follows that

Suppose that over the past year,the real interest rate was 6 percent and the inflation rate was 4 percent.It follows that

Janelle earned a salary of $62,000 in 2004 and $80,000 in 2014.The consumer price index was 126 in 2004 and 170 in 2014.Janelle's 2004 salary in 2014 dollars is

Scenario 24-3 Sue Holloway was an accountant in 1944 and earned $12,000 that year.Her son,Josh Holloway,is an accountant today and he earned $210,000 in 2013.The price index was 17.6 in 1944 and 218.4 in 2013. -Refer to Scenario 24-3.In real terms,Sue Holloway's income amounts to about what percentage of Josh Holloway's income?

In 1972,one could buy a bag of chips,a pound of hamburger,a package of buns,and a small bag of charcoal for about $2.50.If the same goods today cost $6.00,then which pair of CPIs would make the cost in today's dollars the same for both years?

Henri earned a salary of $50,000 in 2001 and $70,000 in 2006.The consumer price index was 177 in 2001 and 265.5 in 2006.Henri's 2006 salary in 2001 dollars is

The consumer price index was 120 in 2013 and 126 in 2014.The nominal interest rate during this period was 8 percent.What was the real interest rate during this period?

If the CPI was 104 in 1967 and is 390 today,then $10 in 1967 purchased the same amount of goods and services as

Suppose that over the past year,the real interest rate was 5 percent and the inflation rate was 3 percent.It follows that

In 1970,Professor Plum earned $12,000;in 1980,he earned $24,000;and in 1990,he earned $36,000.If the CPI was 40 in 1970,60 in 1980,and 100 in 1990,then in real terms,Professor Plum's salary was highest in

John just graduated law school and has two competing job offers.The first is in Phoenix and pays a salary of $150,000.He has a similar job offer in Cleveland that pays $90,000.Which pair of CPIs would make the two salaries have the same purchasing power?

During a certain year,the nominal interest rate was 7 percent,the real interest rate was 4 percent,and the CPI was 198.3 at the end of the year.The CPI at the beginning of the year was