Deck 20: Index Numbers

Question 1

A monthly price index that uses the price changes in consumer goods and services for measuring the changes in consumer prices over time is known as the

A) Paasche index.
B) Consumer Price Index.
C) Producer Price Index.
D) Laspeyres index.

Answer 1

Consumer Price Index.

Question 2

A price index for a given item which is computed by dividing a current unit price by a base-period unit price and multiplying the result by 100 is known as the

A) Producer Price Index.
B) Consumer Price Index.
C) Paasche index.
D) Price relative.

Answer 2

Price relative.

Question 3

The quantity index is an index that is designed to measure changes in _____ over time.

A) production levels
B) consumption levels
C) quantity
D) price

Answer 3

quantity

Question 4

Aggregate price indexes reflecting the prices of stocks listed on the New York Stock Exchange are

A) Stock Exchange indexes.
B) Indexes of Industrial Production.
C) Producer price indexes.
D) Dow Jones averages.

Question 5

Dow Jones averages are aggregate price indexes reflecting the prices of stocks listed on the

A) American Stock Exchange.
B) NASDAQ Exchange.
C) New York Stock Exchange.
D) Tokyo Stock Exchange.

Question 6

The value given to a base-period price is

A) 1.00
B) the actual price in the base period.
C) 100
D) any value larger than 1.00.

Question 7

A weighted aggregate price index where the weight for each item is its current-period quantity is the

A) Aggregate quantity index.
B) Laspeyres index.
C) Paasche index.
D) Quantity index.

Question 8

A weighted aggregate price index where the weight for each item is its base-period quantity is known as the

A) Laspeyres index.
B) Paasche index.
C) Weight index.
D) Quantity index.

Question 9

The price relative is computed by dividing

A) a base-period unit price by a current unit price and multiplying the result by 100.
B) a current unit price by a base-period unit price and multiplying the result by 100.
C) a current unit price by a base-period unit price and dividing the result by 100.
D) current price by quantity.

Question 10

The consumer price index is

A) a monthly price index that is designed to measure changes in prices for goods sold in primary markets.
B) a quarterly price index that uses 100 as a base.
C) a monthly price index that uses the price changes in a market basket of consumer goods and services to measure the changes in consumer prices over time.
D) another name for the Paasche index.

Question 11

The price relative is a price index that is determined by

A) (Price in period t/Base period price)(100).
B) (Base period price/Price in period t)(100).
C) (Price in period t + Base period price)(100).
D) (Price in period t)(100).

Question 12

The Laspeyres index is a weighted aggregate price index where the weight for each item is its

A) current-period quantity.
B) base-period price.
C) current-period price.
D) base-period quantity.

Question 13

A monthly price index that is designed to measure changes in prices of goods sold in primary markets (i.e., first purchase of a commodity in non-retail markets) is the

A) Consumer Price Index.
B) Producer Price Index.
C) Dow Jones Average.
D) Weighted aggregate price index.

Question 14

A Composite price index where the prices of the items in the composite are weighted by their relative importance is called the

A) Price relative.
B) Weighted aggregate price index.
C) Paasche index.
D) Quantity index.

Question 15

A composite price index based on the prices of a group of items is known as the

A) Group price relative.
B) Aggregate price index.
C) Laspeyres index.
D) Paasche index.

Question 16

The Paasche index is a weighted aggregate price index where the weight for each item is its

A) current-period price.
B) current-period quantity.
C) base-period price.
D) base-period quantity.

Question 17

A quantity index which is designed to measure changes in the physical volume of production levels of industrial goods over time is the

A) Quantity index.
B) Producers index.
C) Index of Industrial Production.
D) Paasche index.

Question 18

An index that is designed to measure changes in quantities over time is the

A) Aggregate price index.
B) Quantity index.
C) Relative quantity index.
D) Index of Industries.

Question 19

The reason weights are used in an aggregate index is to

A) ensure that all items have an influence on the index which is relative to their respective importance.
B) ensure that expensive items are considered more heavily.
C) ensure that current prices will influence the index more than base prices.
D) None of these alternatives is correct.

Question 20

Consumer Price Index is

A) a weighted aggregate price index where the weight for each item is its current-period quantity.
B) a weighted aggregate price index where the weight for each item is its last-period quantity.
C) an index that is designed to measure changes in quantities over time.
D) an index that is designed to measure changes in production levels over time.

Question 21

You are given the following information about items X, Y, and Z. The unweighted aggregate price index for 2015 is

A) 80
B) 121.95
C) 1.25
D) 0.80

Question 22

You are given the following information about items X, Y, and Z. The weighted aggregate price index for 2015 is

A) 120.10
B) 11.201
C) 12.10
D) 120

Question 23

Whenever we remove the price increase effect from a time series, we say we are _____ the series.

A) weighting
B) price fixing
C) deflating
D) disaggregating

Question 24

You are given the following information about items A, B, C, and D. The Paasche index in 2015 (rounded) is

A) 94.958
B) 97.245
C) 102.833
D) 105.309

Question 25

The prices of an item for the years 2010 through 2015 are given below. Let 2010 be the base and compute the price relatives for the years 2010 through 2015.

Question 26

A price relative was computed for houses. The base period is 2010. The price relative in 2015 was 140. The interpretation of the price relative is that

A) there has been a 140% increase in the price of houses from 2010 to 2015.
B) there has been a 40% increase in the price of houses from 2010 to 2015.
C) the price of houses in 2015 was $140 higher than the price in 2010.
D) It is impossible to interpret the index.

Question 27

You are given the following information about items A, B, C, and D. The weighted aggregate price index in 2015 is

A) 1.084
B) 92.292
C) 108.898
D) 109.203

Question 28

You are given the following information about items A, B, C, and D. The unweighted aggregate price index in 2015 is

A) 1.092
B) 91.573
C) 108.352
D) 109.203

Question 29

The Dow Jones Industrial Average is based on common stock prices of _____ large companies.

A) 30
B) 40
C) 50
D) 100

Question 30

All of the following are true about the Consumer Price Index except​

A) ​it has a base period of 2002-2003.
B) ​it is based on a market basket of items.
C) ​it includes charges for services (like doctor bills).
D) ​it is the primary measure of the cost of living in the U.S.

Question 31

The Consumer Price Index is based on the price-quantity characteristics of _____ items.

A) 50
B) 100
C) 400
D) 800

Question 32

A common use of the Producer Price Index is as a leading indicator of the future trend of _____ prices.

A) raw material
B) consumer
C) industrial stock
D) wholesale market

Question 33

You are given the following information about items X, Y, and Z. \The price relative for item Y is

A) 70.83
B) 1.50
C) 40.00
D) 141.18

Question 34

You are given the following information on items A, B, C, and D. The weighted aggregate quantity index when 2005 is used as the base and prices are used as weights is

A) 67.956
B) 80.123
C) 300.700
D) 146.984

Question 35

You are given the following information about items A, B, C, and D. The Laspeyres index in 2015 (rounded) is

A) 96.268
B) 95.9539
C) 102.833
D) 103.876

Question 36

Which of the following indexes is not stated as a percentage of some base-period value?​

A) ​Consumer Price Index
B) ​Producer Price Index
C) ​Dow Jones Industrial Average
D) ​Index of Industrial Production

Question 37

You are given the following information about items A, B, C, and D. The price relative for item A in 2015 (use 2010 as the base year) is

A) 1.082
B) 7
C) 92.391
D) 108.235

Question 38

The prices for a kilowatt hour of electricity for the years 2013 through 2016 are given below. Determine the price relatives for the years 2013 through 2016. Let 2013 be the base.

Question 39

In 1995 the price of a pound of ground beef was $1.25. By 2010, the price had increased to $2.50. The price relative is

A) 50
B) 0.5
C) 200
D) 3.125