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Exam 24: Measuring the Cost of Living

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Question 81

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For purposes of calculating the CPI, the food & beverages category of consumer spending includes the cost of

A) food away from home.
B) alcoholic beverages.
C) both food away from home and alcoholic beverages.
D) neither food away from home nor alcoholic beverages because these are included in the recreation category of consumer spending.

E) A) and D)
F) A) and C)

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Question 82

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The Bureau of Labor Statistics surveys consumers to determine a fixed basket of goods.

A) True
B) False

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Question 83

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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.

The price index was 120 in 2012 and 126 in 2013. What was the inflation rate?

In the basket of goods that is used to compute the consumer price index, the three largest categories of consumer spending are

Table 24-12. Will's expenditures on food for three consecutive years, along with other values, are presented in the table below. -Refer to Table 24-12. If the nominal interest rate was 8 percent in 2010, then

Table 24-7. The table below applies to an economy with only two goods - hamburgers and hot dogs. The fixed basket consists of 4 hamburgers and 8 hot dogs. -Refer to Table 24-7. If the base year is 2009, then the economy's inflation rate in 2010 is

Table 24-8 The table below relates to the economy of Mainland, where the typical consumer's market basket consists of 2 televisions and 300 hamburgers. -Refer to Table 24-8. If the base year is 2013, then the consumer price index was

Table 24-3 The table below pertains to Iowan, an economy in which the typical consumer's basket consists of 4 pounds of pork and 3 bushels of corn. -Refer to Table 24-3. If 2012 is the base year, then the CPI for 2013 was

Of Social Security benefits and federal income tax brackets, which is indexed?

Which of the following statements about real and nominal interest rates is correct?

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 2013 is the base year, then the CPI for 2012 was

If the nominal interest rate is 8 percent and the rate of inflation is 3 percent, then the real interest rate is

If the nominal interest rate is 4.2 percent and the rate of inflation is -0.5 percent, then the real interest rate is

Suppose the price of a six-pack of cola rises from $3 to $3.75 and the price of a pack of mints rises from $1.25 to $1.75. If the CPI rises from 140 to 182, then people likely will buy

The economy's inflation rate is the

If the CPI was 170 in 1998 and was 187 in 1999, what was the inflation rate in 1999?

Table 24-11. Megan's salary for three consecutive years, along with other values, are presented in the table below. -Refer to Table 24-11. Suppose the consumer price index for 2013 is not necessarily 235. Then Megan's 2013 salary represents more purchasing power than her 2011 salary as long as the consumer price index for 2013 is

In a simple economy, people consume only 2 goods, food and clothing. The market basket of goods used to compute the CPI consists of 50 units of food and 10 units of clothing. a. What are the percentage increases in the price of food and in the price of clothing? b. What is the percentage increase in the CPI? c. Do these price changes affect all consumers to the same extent? Explain.