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Data from the Bureau of Labor Statistics show that apparel makes up 14 percent of the typical consumer's budget.

A) True
B) False

Correct Answer

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If the nominal interest rate is 5 percent and the real interest rate is 2 percent,then the inflation rate is 3 percent.

A) True
B) False

Correct Answer

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If the current year CPI is 140,then the price level has increased 40 percent since the base year.

A) True
B) False

Correct Answer

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Because the consumer price index reflects the goods and services bought by consumers better than the GDP deflator does,it is the more common gauge of inflation.

A) True
B) False

Correct Answer

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By keeping the basket of goods and services the same when computing the CPI,the Bureau of Labor Statistics isolates the effects of price changes from the effect of any quantity changes that might be occurring at the same time.

A) True
B) False

Correct Answer

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verified

If you currently make $25,000 a year and the CPI rises from 110 today to 150 in five years,then you need to be making $43,333.33 in five years to have kept pace with consumer price inflation.

A) True
B) False

Correct Answer

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The largest sector in the consumer price index market basket is food and beverage purchases.

A) True
B) False

Correct Answer

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In a period of inflation real interest rates will be greater than nominal interest rates.

A) True
B) False

Correct Answer

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Substitution bias causes the CPI to understate the increase in the cost of living from one year to the next.

A) True
B) False

Correct Answer

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The CPI for 2008 is computed by dividing the price of the basket of goods and services in 2008 by the price of the basket of goods and services in the base year,then multiplying by 100.

A) True
B) False

Correct Answer

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Bob deposits $100 in a bank account that pays an annual interest rate of 5 percent.A year later,Bob withdraws his $105.If inflation was 5 percent during the year the money was deposited,then Bob's purchasing power has not changed.

A) True
B) False

Correct Answer

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The goal of the consumer price index is to gauge how much incomes must rise to maintain a constant standard of living.

A) True
B) False

Correct Answer

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When the price of nuclear missiles rises,this change is reflected in the CPI but not in the GDP deflator.

A) True
B) False

Correct Answer

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If the quality of a good deteriorates from one year to the next while its price remains the same,then the value of a dollar falls.

A) True
B) False

Correct Answer

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When the consumer price index falls,the typical family has to spend fewer dollars to maintain the same standard of living.

A) True
B) False

Correct Answer

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Consumer price index = Consumer price index = × 100. × 100.

A) True
B) False

Correct Answer

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The CPI and GDP deflator usually tell two different stories about how quickly prices are rising.

A) True
B) False

Correct Answer

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Data from the Bureau of Labor Statistics show that consumer spending on transportation is only slightly higher than consumer spending on food and beverages.

A) True
B) False

Correct Answer

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During periods of deflation,the real interest rate will be lower than the nominal interest rate.

A) True
B) False

Correct Answer

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The content of the basket of goods and services used to compute the CPI changes every month.

A) True
B) False

Correct Answer

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Showing 41 - 60 of 83

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