Transcript Ch 23
Click Clickon onthe thebutton buttontotogo gototothe theQuestion problem © 2013 Pearson The CPI and the Cost of Living 23 CLICKER QUESTIONS © 2013 Pearson Click Clickon onthe thebutton buttontotogo gototothe theQuestion problem Checkpoint 23.1 Checkpoint 23.2 Checkpoint 23.3 Question 1 Question 4 Question 8 Question 2 Question 5 Question 9 Question 3 Question 6 Question 10 Question 7 © 2013 Pearson CHECKPOINT 23.1 Question 1 The Consumer Price Index (CPI) measures ________. A. the average price of all the goods and services that consumers buy B. the prices of the consumption goods and services that have increased C. the average of the prices paid by urban consumers for a fixed market basket of goods and services D. consumer confidence in the economy E. the average of the costs paid by businesses to produce a fixed market basket of consumption goods and services © 2013 Pearson CHECKPOINT 23.1 Question 2 Suppose that at base period prices, the market basket of consumption goods and services costs $180 and at current period prices the same market basket of goods and services costs $300. The CPI in the current period is ____. A. B. C. D. E. 166.7 66.7 120.0 60.0 300.0 © 2013 Pearson CHECKPOINT 23.1 Question 3 If in June 2009, the CPI was 82.3 and in 2010, it was 90.9, then the inflation rate in 2010 was _______. A. 10.4 percent B. 8.6 percent C. 90.9 percent D. 82.3 percent E. 9.09 percent © 2013 Pearson CHECKPOINT 23.2 Question 4 Joe buys chicken and beef. If the price of beef rises and the price of chicken falls, Joe will buy ____ in the CPI. A. more beef and create a new goods bias B. more chicken and create a commodity substitution bias C. the same quantity of beef and chicken and create a commodity substitution bias D. less chicken and beef and create a quality change bias E. more chicken and eliminate the commodity substitution bias © 2013 Pearson CHECKPOINT 23.2 Question 5 Which of the following statements is true? A. The CPI is an accurate measure of the cost of living. B. The GDP price index is a good alternative to the CPI as a measure of the cost of living. C. The core inflation rate is the inflation rate of energy and food prices. D. The PCE inflation rate is generally lower than the CPI inflation rate. E. The core inflation rate exceeds the CPI inflation rate. © 2013 Pearson CHECKPOINT 23.2 Question 6 A consequence of the CPI bias is that it _______. A. B. C. D. E. decreases government outlays increases international competition reduces outlet substitution bias distorts private contracts is impossible to measure the inflation rate © 2013 Pearson CHECKPOINT 23.2 Question 7 The price of dishwashers has increased while at the same time the quality of a dishwasher has improved. The BEA ______. A. adjusts the CPI basket monthly to reflect the improved quality B. selects a new CPI basket every month C. uses a process that eliminates any upward bias in the CPI D. does the best job it can to estimate the effect of the improved quantity on the price E. does not take account of any quality changes because the CPI is not an index of quality © 2013 Pearson CHECKPOINT 23.3 Question 8 In 2011, apples cost $1.49 a pound. The CPI was 120 in 2011 and 140 in 2012. If the real price in 2012 was the same as in 2011, the price apples in 2010 was _______. A. B. C. D. E. $2.74 a pound $1.69 a pound $1.66 a pound $1.74 a pound $1.28 a pound © 2013 Pearson CHECKPOINT 23.3 Question 9 Personal saving was $534.2 billion in December 2009, compared with $506.3 billion in November 2009. The PCE price index increased 0.1 percent in December, compared with 0.3 percent in November. In December, real personal saving ______. A. B. C. D. decreased because the PCE price index rose increased because all personal saving is real increased because the inflation rate fell increased because the PCE price index rose by less than the increase in personal saving E. was the same as it was in November © 2013 Pearson CHECKPOINT 23.3 Question 10 You borrow at a nominal interest rate of 10 percent a year. If the inflation rate is 4 percent a year, then you pay a real interest rate of ________. A. B. C. D. E. 0 percent a year 6 percent a year 2.5 percent a year 16 percent a year 14 percent a year © 2013 Pearson