Topic: Inflation, Difficulty: M, Type: CA, Answer: D

Topic: Inflation, Difficulty: M, Type: CA, Answer: d

Which of the following is true about inflation?

a. Inflation promotes social harmony by uniting people against the government.

b. Inflation is more damaging if it is anticipated.

c. Accurate anticipation of inflation is possible for everyone who is well informed about economic events.

d. Those who lend money at a rate below the rate of inflation suffer economic losses.

e. If people accurately anticipate inflation, their actions will prevent it.

Topic: Consumer price index, Difficulty: D, Type: RE, Answer: c

One way the consumer price index (CPI) differs from the GDP chain price index is that the CPI:

a.uses current year quantities of goods and services.

b.includes separate market baskets of goods and services for both base and current years.

c.includes only goods and services bought by typical urban consumers.

d.is bias free.

Topic: Consumer price index, Difficulty: D, Type: RE, Answer: a

One way the consumer price index (CPI) differs from the GDP chain price index is that it:

a.includes purchases of items bought by typical urban consumers.

b.uses only current year quantities.

c.is based on all final goods and services.

d.includes services.

Topic: Consumer price index, Difficulty: D, Type: RE, Answer: c

The consumer price index (CPI):

a.adjusts for changes in product quality.

b.includes separate market baskets of goods and services for both base and current years.

c.includes only goods and services bought by typical urban consumer.

d.uses current year quantities of goods and services.

Topic: Consumer price index, Difficulty: D, Type: CA, Answer: d

Suppose we shopped for a basket of goods in 2001 and it cost $350. Suppose the same basket of goods adds up to $385 in 2002. If we use 2001 as a base year, what would be the 2002 CPI?

a. 35.

b. 90.

c. 100.

d. 110.

e. 135.

Topic: Real income, Difficulty: D, Type: CA, Answer: d

Real income for a given year would be less than nominal income in that year if:

a.the consumer price index was less than 100 in that year.

b.nominal income in that year was greater than nominal income in the previous year.

c.nominal income in that year was less than nominal income in the previous year.

d.the consumer price index was greater than 100 in that year.

Topic: Real income, Difficulty: M, Type: SA, Answer: d

The CPI (using a 1982 base year) for 1951 is 26.0. Suppose a household's annual take-home pay in 1951 was $8,320. What would be an equivalent home pay in 1982?

a.$10,483.

b.$21,632.

c.$23,680.

d.$32,000.