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Exam 24: Measuring the Cost of Living

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Question 141

Multiple Choice

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The price of milk increases dramatically, causing a 0.5 percent increase in the CPI. The price increase will most likely cause the GDP deflator to increase by

A) more than 0.5 percent.
B) less than 0.5 percent.
C) 0.5 percent.
D) None of the above is correct; this particular price increase will not affect the GDP deflator.

E) B) and D)
F) B) and C)

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Question 142

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Data from the Bureau of Labor Statistics show that the largest category of consumer spending is housing.

A) True
B) False

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Question 143

Multiple Choice

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When box office receipts are not corrected for inflation, the most popular movie of all time is

In 1931 the price of a movie ticket was $0.25. The consumer price index was 15.2 in 1931, and 210 in 2008. Using 2008 prices, the real price of a movie in 1931 was

Which of the following is the correct formula for calculating the inflation rate?

Table 24-2 The table below pertains to Pieway, an economy in which the typical consumer's basket consists of 15 bushels of peaches and 10 bushels of pecans. -Refer to Table 24-2. If 2012 is the base year, then the CPI for 2013 was

Explain how the prices of goods and services used in the CPI differ from the prices reflected by GDP deflator.

Which of the following agencies calculates the CPI?

A worker received $5 for a daily wage in 1930, which has the equivalent value of $63.24 today. If the CPI was 17 in 1930 what is the value of the CPI today, rounded to the nearest whole number?

Table 24-1 The table below lists annual consumer price index and inflation rates for a country over the period 2005-2010. Assume the year 2005 is used as the base year. -Refer to Table 24-1. What belongs in space A?

In a particular economy, the price index was 120 in 2012 and 130 in 2013. Which of the following statements is correct?

Samantha goes to the grocery store to make her monthly purchase of ginger ale. As she enters the soft drink section, she notices that the price of ginger ale has increased 15 percent, so she decides to buy some peppermint tea instead. To which problem in the construction of the CPI is this situation most relevant?

If the current year CPI is 90, then the price level has decreased 10 percent since the base year.

If the CPI was 68 in 1965 and is 285 today, then $100 today purchases the same amount of goods and services as

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

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. Josh Holloway's 2013 income in 1944 dollars is

The inflation rate is calculated

Suppose a basket of goods and services has been selected to calculate the CPI and 2012 has been selected as the base year. In 2012, the basket's cost was $50; in 2014, the basket's cost was $52; and in 2016, the basket's cost was $55. The value of the CPI in 2016 was

Table 24-6 The table below pertains to Napandsnack, an economy in which the typical consumer's basket consists of 2 pillows and 15 hotdogs. -Refer to Table 24-6. If the base year is 2011, then the economy's inflation rate in 2011 was

The real interest rate measures the change in dollar amounts.