Question 1

The CPI is more commonly used as a gauge of inflation than the GDP deflator is because

Accepted Answer

A) the CPI is easier to measure. 
B) the CPI is calculated more often than the GDP deflator is. 
C) the CPI better reflects the goods and services bought by consumers. 
D) the GDP deflator cannot be used to gauge inflation. 
A) the CPI is easier to measure. 
B) the CPI is calculated more often than the GDP deflator is. 
C) the CPI better reflects the goods and services bought by consumers. 
D) the GDP deflator cannot be used to gauge inflation. C

Question 2

Babe Ruth,the famous baseball player,earned $80,000 in 1931.Today,the best baseball players can earn more than 400 times as much as Babe Ruth earned in 1931.However,prices have also risen since 1931.We can conclude that

Accepted Answer

A) the best baseball players today are about 400 times better off than Babe Ruth was in 1931. 
B) because prices have also risen,the standard of living of baseball stars hasn't changed since 1931. 
C) one cannot make judgments about changes in the standard of living based on changes in prices and changes in incomes. 
D) one cannot determine whether baseball stars today enjoy a higher standard of living than Babe Ruth did in 1931 without additional information regarding increases in prices since 1931. 
A) the best baseball players today are about 400 times better off than Babe Ruth was in 1931. 
B) because prices have also risen,the standard of living of baseball stars hasn't changed since 1931. 
C) one cannot make judgments about changes in the standard of living based on changes in prices and changes in incomes. 
D) one cannot determine whether baseball stars today enjoy a higher standard of living than Babe Ruth did in 1931 without additional information regarding increases in prices since 1931. D

Question 3

When the overall level of prices in the economy is increasing,economists say that the economy is experiencing

Accepted Answer

A) economic growth. 
B) stagflation. 
C) inflation. 
D) deflation. 
A) economic growth. 
B) stagflation. 
C) inflation. 
D) deflation. C

Question 4

When the consumer price index falls,the typical family

Accepted Answer

A) has to spend more dollars to maintain the same standard of living. 
B) can spend fewer dollars to maintain the same standard of living. 
C) finds that its standard of living is not affected. 
D) can save less because they do not need to offset the effects of rising prices. 
A) has to spend more dollars to maintain the same standard of living. 
B) can spend fewer dollars to maintain the same standard of living. 
C) finds that its standard of living is not affected. 
D) can save less because they do not need to offset the effects of rising prices.

Question 5

Which of the following statements is correct?

Accepted Answer

A) The CPI can be used to compare dollar figures from different points in time. 
B) The percentage change in the CPI is a measure of the inflation rate,but the percentage change in the GDP deflator is not a measure of the inflation rate. 
C) Compared to the consumer price index (CPI),the GDP deflator is the more common gauge of inflation. 
D) The GDP deflator better reflects the goods and services bought by consumers than does the CPI. 
A) The CPI can be used to compare dollar figures from different points in time. 
B) The percentage change in the CPI is a measure of the inflation rate,but the percentage change in the GDP deflator is not a measure of the inflation rate. 
C) Compared to the consumer price index (CPI),the GDP deflator is the more common gauge of inflation. 
D) The GDP deflator better reflects the goods and services bought by consumers than does the CPI.

Question 6

The consumer price index is used to

Accepted Answer

A) convert nominal GDP into real GDP. 
B) turn dollar figures into meaningful measures of purchasing power. 
C) characterize the types of goods and services that consumers purchase. 
D) measure the quantity of goods and services that the economy produces. 
A) convert nominal GDP into real GDP. 
B) turn dollar figures into meaningful measures of purchasing power. 
C) characterize the types of goods and services that consumers purchase. 
D) measure the quantity of goods and services that the economy produces.

Question 7

When the consumer price index rises,the typical family

Accepted Answer

A) has to spend more dollars to maintain the same standard of living. 
B) can spend fewer dollars to maintain the same standard of living. 
C) finds that its standard of living is not affected. 
D) can offset the effects of rising prices by saving more. 
A) has to spend more dollars to maintain the same standard of living. 
B) can spend fewer dollars to maintain the same standard of living. 
C) finds that its standard of living is not affected. 
D) can offset the effects of rising prices by saving more.

Question 8

The inflation rate is defined as the

Accepted Answer

A) price level in an economy. 
B) change in the price level from one period to the next. 
C) percentage change in the price level from the previous period. 
D) price level minus the price level from the previous period. 
A) price level in an economy. 
B) change in the price level from one period to the next. 
C) percentage change in the price level from the previous period. 
D) price level minus the price level from the previous period.

Question 9

The consumer price index is used to

Accepted Answer

A) monitor changes in the level of wholesale prices in the economy. 
B) monitor changes in the cost of living over time. 
C) monitor changes in the level of real GDP over time. 
D) monitor changes in the stock market. 
A) monitor changes in the level of wholesale prices in the economy. 
B) monitor changes in the cost of living over time. 
C) monitor changes in the level of real GDP over time. 
D) monitor changes in the stock market.

Question 10

Which of the following is not correct?

Accepted Answer

A) The consumer price index gives economists a way of turning dollar figures into meaningful measures of purchasing power. 
B) The consumer price index is used to monitor changes in the cost of living over time. 
C) The consumer price index is used by economists to measure the inflation rate. 
D) The consumer price index is used to measure the quantity of goods and services that the economy is producing. 
A) The consumer price index gives economists a way of turning dollar figures into meaningful measures of purchasing power. 
B) The consumer price index is used to monitor changes in the cost of living over time. 
C) The consumer price index is used by economists to measure the inflation rate. 
D) The consumer price index is used to measure the quantity of goods and services that the economy is producing.

Question 11

Economists use the term inflation to describe a situation in which

Accepted Answer

A) some prices are rising faster than others. 
B) the economy's overall price level is rising. 
C) the economy's overall price level is high,but not necessarily rising. 
D) the economy's overall output of goods and services is rising faster than the economy's overall price level. 
A) some prices are rising faster than others. 
B) the economy's overall price level is rising. 
C) the economy's overall price level is high,but not necessarily rising. 
D) the economy's overall output of goods and services is rising faster than the economy's overall price level.

Question 12

The term inflation is used to describe a situation in which

Accepted Answer

A) the overall level of prices in the economy is increasing. 
B) incomes in the economy are increasing. 
C) stock-market prices are rising. 
D) the economy is growing rapidly. 
A) the overall level of prices in the economy is increasing. 
B) incomes in the economy are increasing. 
C) stock-market prices are rising. 
D) the economy is growing rapidly.

Exam 11: Measuring the Cost of Living

The CPI is more commonly used as a gauge of inflation than the GDP deflator is because

Babe Ruth,the famous baseball player,earned $80,000 in 1931.Today,the best baseball players can earn more than 400 times as much as Babe Ruth earned in 1931.However,prices have also risen since 1931.We can conclude that

When the overall level of prices in the economy is increasing,economists say that the economy is experiencing

When the consumer price index falls,the typical family

Which of the following statements is correct?

The consumer price index is used to

When the consumer price index rises,the typical family

The inflation rate is defined as the

The consumer price index is used to

Which of the following is not correct?

Economists use the term inflation to describe a situation in which

The term inflation is used to describe a situation in which

Ten Principles of Economics

Ten Principles of Economics: How People Make Decisions

Ten Principles of Economics: How People Interact

Ten Principles of Economics: How the Economy As a Whole Works

Ten Principles of Economics: Part A

Ten Principles of Economics: Part B

Thinking Like an Economist

Thinking Like an Economist: The Economist As Scientist

Thinking Like an Economist: The Economist As Policy Adviser

Thinking Like an Economist: Why Economists Disagree

Thinking Like an Economist: Lets Get Going

Thinking Like an Economist: Graphing a Brief Review

Thinking Like an Economist: Part A

Thinking Like an Economist: Part B

Interdependence and the Gains From Trade

Interdependence and the Gains From Trade: A Parable for the Modern Economy

Interdependence and the Gains From Trade: Comparative Advantage the Driving Force of Specialization

Interdependence and the Gains From Trade: Applications of Comparative Advantage

Interdependence and the Gains From Trade: Conclusion

Interdependence and the Gains From Trade: Part A

Interdependence and the Gains From Trade: Part B

The Market Forces of Supply and Demand

The Market Forces of Supply and Demand:Markets and Competition

The Market Forces of Supply and Demand: Demand

The Market Forces of Supply and Demand: Supply

The Market Forces of Supply and Demand: Supply and Demand Together

The Market Forces of Supply and DemandConclusion How Prices Allocate Resources

The Market Forces of Supply and Demand: Part A

The Market Forces of Supply and Demand: Part B

Elasticity and Its Applications

Elasticity and Its Applications: The Elasticity of Demand

Elasticity and Its Applications: The Elasticity of Supply

Elasticity and Its Applications: Three Applications of Supply,demand,and Elasticity

Elasticity and Its Applications: Part A

Elasticity and Its Applications: Part B

Supply Demand and Government Policies

Supply Demand and Government Policies: Controls on Prices

Supply Demand and Government Policies: Taxes

Supply Demand and Government Policies: Part A

Supply Demand and Government Policies: Part B

Consumers Producers and the Efficiency of Markets

Consumers Producers and the Efficiency of Markets: Consumer Surplus

Consumers Producers and the Efficiency of Markets: Producer Surplus

Consumers Producers and the Efficiency of Markets: Market Efficiency

Consumers Producers and the Efficiency of Markets: Conclusion Market Efficiency and Market Failure

Consumers Producers and the Efficiency of Markets: Part A

Consumers Producers and the Efficiency of Markets: Part B

Application the Cost of Taxation

Application the Cost of Taxation: The Deadweight Loss of Taxation

Application the Cost of Taxation: The Determinants of the Deadweight Loss

Application the Cost of Taxation: Deadweight Loss and Tax Revenue As Taxes Vary

Application the Cost of Taxation: Conclusion

Application the Cost of Taxation: Part A

Application the Cost of Taxation: Part B

Application International Trade

Application International Trade: The Determinants of Trade

Application International Trade: The Winners and Losers From Trade

Application International Trade: The Arguments for Restricting Trade

Application International Trade: Conclusion

Application International Trade: Part A

Application International Trade: Part B

Measuring a Nations Income

Measuring a Nations Income: The Economy's Income and Expenditure

Measuring a Nations Income: The Measurement of GDP

Measuring a Nations Income: The Components of GDP

Measuring a Nations Income: Real Versus Nominal GDP

Measuring a Nations Income: Is GDP a Good Measure of Economic Well-Being