# Econ 202 Final Ch. 11

The consumer price index tires to measure how much consumer incomes must rise in order to maintain a constant

D. standard of living.

In calculating the CPI, a fixed basket of goods and services is used. The quantities of the goods and services in the fixed basket are determined by

B. surveying consumers.

If the quality of a good deteriorates while its price remains the same, then the value of a dollar

D. falls and the cost of living increases.

Refer to Table 24-3. If 2012 is the base year, then the CPI for 2013 was

C. 132.8.

When computing the cost of the basket of goods and services purchased by a typical consumer, which of the following changes from year to year?

B. the prices of the goods and services

Refer to Table 24-1. What belongs in space C?

C. 8.7%

Suppose a basket of goods and services has been selected to calculate the CPI and 2009 has been selected as the base year. In 2007, the basket's cost was $64; in 2009, the basket's cost was$68; and in 2011, the basket's cost was $70. The value of the CPI A. 102.94. A decrease in the price of domestically produced nuclear reactors will be reflected in C. the GDP deflator but not in the consumer price index. Refer to Table 24-7. If the base year is 2009, then the economy's inflation rate in 2010 is B. 10 percent. An increase in the price of Irish whiskey imported into the United States will be reflected in C. the U.S. CPI, but not the U.S. GDP deflator. When the consumer price index rises, the typical family has to spend more dollars to maintain the same standard of living. 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, C. Sophia will have 5 percent more money, which will purchase 3 percent more goods. The CPI was 172 in 2007, and the CPI was 46.5 in 1982. If your parents put aside$1,000 for you in 1982, then how much would you have needed in 2007 in order to buy what you could have bought with the $1,000 in 1982? D.$3,698.92

Iggie took a university teaching job as an assistant professor in 1980 at a salary of $15,000. By 2011, she had been promoted to full professor, with a salary of$70,000. If the price index was 82 in 1980 and 225 in 2011, then what is Iggie's 1980 salary

A. \$41,159

Indexation refers to

A. using a law or contract to automatically correct a dollar amount for the effects of inflation.

If the nominal interest rate is 5 percent and the rate of inflation is 9 percent, then the real interest rate is

B. -4 percent

The CPI is a measure of the overall cost of

A. the goods and services purchased by a typical consumer.

The inflation rate is defined as the

D. percentage change in the price level from the previous period.

In the calculation of the CPI, tea is given greater weight than beer if

B. consumers buy more tea than beer.

As long as prices are rising over time, then

B. the nominal interest rate exceeds the real interest rate.