ECON 214 quiz 3 solutions complete answers

ECON 214 quiz 3 solutions complete answers 

 

Based on the figure, one could correctly state that:

 

From 1960 until 2012, the long-run average rate of inflation in the United States was:

 

Inflation can create uncertainty by making:

 

Refer to the following figure when answering the questions that follow.

 

Based on the figure, which of the following statements best applies?

 

Deflation:

 

In 1940 you could buy a “nickel Pepsi” for (oddly enough) a nickel. If the price index in 1940 was 14 and the 2011 price index was 221, then the inflation-adjusted price of a Pepsi would be:

 

If mustard now costs $0.75 when today’s price index is 225, and if the price index in 1970 was 38, we would most accurately say that:

 

If the price of a typical market basket of goods increased from about $20 in 1960 to $200 in early 2012, then it:

 

The average inflation rate in the United States from 2000–2012 was about:

 

Typically the consumer price index (CPI) is calculated by:

 

Refer to the following table to answer the questions that follow:

 

As presented in the table, the rate of inflation (or deflation) from 2002–2003 was (rounded to two decimal places):

 

As presented in the table, the approximate rate of inflation (or deflation) from 2000–2001 was (rounded to the nearest percent):

 

To convert a current price of a product to its price in the past, we would take the current price of a product and:

 

The agency that measures the consumer price index (CPI) in the United States is:

 

Inflation creates uncertainty because:

 

The housing crisis has some roots in inflation because:

 

 

1.
According to the consumer price index (CPI), in a particular year, the price of gasoline rises in the United States by 22%; simultaneously, the price of all food items falls by 8%. Which statement is correct?
 
 
2.
According to the figure, deflation was occurring:
 
 
4.
According to the March 2012 consumer price index (CPI), the top three consumer expenditure categories are, respectively:
 
 
5.
According to the price confusion problem, if the price of a product increases, then:
 
 
6.
According to the textbook, the fully completed house that one could buy from the Sears catalog in 1924 would be
 
 
8.
According to the textbook, the top-grossing movie of all time (adjusted for inflation) is:
 
 
11.
As a business owner, you find that your resource prices are increasing often. Because these costs are rising, you find it necessary to change your prices frequently. This best describes:
 
 
14.
As presented in the table, the rate of inflation from 1999-2000 (i.e., during the year 2000) was (rounded to two decimal places):
 
 
15.
As presented in the table, the rate of inflation (or deflation) from 2001-2002 was (rounded to two decimal places):
 
 
17.
Assume the price of salt increased from $0.30 in 1985 to $0.50 in 1995. If we calculate the average rate of price increase for salt over this period, we could accurately say:
 
 
18.
Assume tuition and fees at North Carolina State University cost $4,259 in 2004 and $7,787 in 2012. If the price index was 184 in 2004 and 226 in 2012, then we could say:
 
 
19.
Assume tuition at Houston Community College cost $588 (per semester) in 2004 and $813 in 2012. If the price index was 184 in 2004 and 226 in 2012, then we could say
 
 
20.
Assume tuition at Penn State cost $6,142 (per semester) in 2007 and $7,562 in 2012. If the price index was 207.34 in 2007 and 226 in 2012, then we could say:
 
 
21.
Assume tuition at the University of Virginia cost $2,962 (per semester) in 2004 and $11,584 in 2012. If the price index was 184 in 2004 and 226 in 2012, then we could say:
 
 
22.
Assume you earned $30,000 in 2012, and the CPI in 2013 was 238. How much of a raise did you need, in dollars, to keep up with the change in the inflation rate
 
 
23.
Assume you received a 4% raise in 2013. In addition, the CPI in 2013 was 240. Your real wage in 2013 ___________
 
 
24.
Based on the figure, and if we define inflation as being under control at rates less than 10%, when was inflation under control?
 
 
25.
Based on the weight of the consumer price index (CPI), the price of rental housing increases by 15% and that of owned housing by 5%. During the same year, the price of gasoline falls by 22%. We can say that:
 
 
26.
The Bureau of Labor Statistics releases consumer price index (CPI) data
 
 
27.
The Bureau of Labor Statistics reported the consumer price index as 211.4 in December 2007, and 231.1 in December 2012. By what percentage did the index increase from the end of 2007 to the end of 2012 (rounded to one decimal place)
 
 
28.
The chained consumer price index (CPI) is a/an:
 
 
29.
The chained consumer price index (CPI) is a better measure of prices than the traditional CPI:
 
 
30.
The chained consumer price index (CPI) tends to be:
 
 
31.
Chicken becomes more expensive in 2008 at Wegmans in State College, Pennsylvania. This means
 
 
32.
The concept of a price index is that:
 
 
 
 
 
 
 
 
 
 
 

33.
Consider a nation in which the price index last year was 130 and this year it is 150. Which statement is correct?
 
 
34.
Consider a nation in which the price index was 150 last year and this year it is 130. Which statement is correct?
 
 
39.
Deflation is best described as:
 
 
40.
The distinction between price confusion problems and menu costs is that:
 
 
41.
Donna Newton made $0.30 per hour in 1946 at a small restaurant in Clearfield, Pennsylvania. If the consumer price index (CPI) was 18.3 in 1946 and 202.4 in 2011 and the legal minimum wage in 2011 was $7.25, then:
 
 
42.
Donna Newton made $0.30 per hour in 1946 at a small restaurant in Clearfield, Pennsylvania. If the consumer price index (CPI) was 18.3 in 1946 and 202.4 in 2011, then Donna`s inflation-adjusted wage would be:
 
 
43.
Education typically composes about:
 
 
46.
Gas prices typically rise every summer as more people travel during the summer months. If the economy is in a recession and your friend tells you that gas prices are still rising during the summer months, which of the following is true
 
 
48.
How do you convert a price of a good from an earlier time into today`s price?
 
 
49.
If 51% of all goods in the consumer price index (CPI) became more expensive and 49% became cheaper
 
 
50.
If a Hershey`s chocolate bar cost $0.05 in 1921 when the price index was 18 and the same size and weight Hershey`s chocolate bar cost $0.05 in 1955 when the price index was 27, then:
 
 
51.
If cheeseburgers become more expensive and consumers switch their purchases away from cheeseburgers but the consumer price index (CPI) still assumes they buy the same amount, then:
 
 
52.
If everyone buys the same goods every year and the price of housing rises by 38%:
 
 
53.
If healthcare costs make up 8% of total expenditures and they rise by 15% while the other components in the consumer price index remain constant, by how much will the price index rise
 
 
 
 
 
 
 
 
 

54.
If housing prices increase by 25% and the price of all other goods decreases by 22%, then:
 
 
56.
If nominal income increases, then:
 
 
58.
If people bought the same market basket of goods as the average consumer again and again:
 
 
59.
If real income increases, then:
 
 
60.
If Robert was earning $10,000 and now earns $11,500, then:
 
 
61.
If the consumer price index (CPI) was 100 in the period of 1982-1984, then
 
 
62.
If the CPI today is 230, then the inflation rate since the base year is
 
 
63.
If the goods producers buy change dramatically between years, then:
 
 
64.
If the price index in 1922 was 17 and a unit of Nabisco Oreo cookies cost $0.32, and if the price index today is 220 and a unit of Nabisco Oreo cookies costs $2.99, then the inflation-adjusted price of Oreos is
 
 
66.
If the price of industrial plastic injection molding machines rose by 20% and the price of oranges fell by 20%, then:
 
 
67.
If the value of the consumer price index (CPI) in 2013 was 135 and the value of the CPI in 2012 was 117, we could correctly say that
 
 
68.
If your boss calls you into her office and offers you a promotion, which will include a 5% pay increase, how would you evaluate the value of your raise?
 
 
69.
If your nominal wage rises but you think that it automatically means your real wage rose, then:
 
 
70.
If your real wage rose but your nominal wage fell, this would imply that:
 
 
73.
In 1991, the Barenaked Ladies released their hit song “If I Had a Million Dollars.” How much money would the group need to have a million dollars’ worth of purchasing power in 2012? Note that the consumer price index in 1991 was 136.2 and in 2012 it was 230.0.
 
 
74.
In a particular nation, people buy a completely unique and different set of goods and services every year. None of the goods purchased in the new year are the same as any of the goods purchased in the previous year. Based on this information
 
 
 
 
 
 
 
 
 

75.
In Bovania, cattle compose 48% of the consumer price index (CPI), housing composes 32%, and entertainment accounts for the remaining 20%. If, in a certain year, the price of cattle rises by 30% and the price of housing rises by 25%, then:
 
 
76.
In Bovania, milk constitutes 56% of the typical basket of goods for a typical consumer. Let`s say the price of milk rises by 7% and the prices of all other goods fall by 4%. Based on the information given, we can definitely say:
 
 
77.
In Bovania, milk constitutes 56% of the typical basket of goods for a typical consumer. Let’s say the price of milk rises by 4% and the prices of all other goods fall by 10%. Based on the information given, we can definitely say:
 
 
79.
In Country Z, the prices of goods are measured on an annual basis on the last day of the year. In Country Y, the prices of goods are measured on a weekly basis every Wednesday. Comparing the two countries based on this information
 
 
80.
In December 2012, what percentage of a typical consumer’s income was spent on consumer goods and services found in the CPI
 
 
81.
In Felixania, cat food constitutes 45% of the typical basket of goods for a typical consumer, dog food constitutes 3%, and all other goods constitute the remaining 52%. Assume the price of cat food rises by 4%, the price of dog food falls by 10%, and the prices for all other goods remain constant. Based on the information given, we can definitely say:
 
 
84.
Inflation in Zimbabwe
 
 
85.
Inflation is occurring in a nation; the implication(s) of this is/are:
 
 
86.
Inflation necessarily occurs when:
 
 
87.
Inflation occurs:
 
 
89.
In Las Vegas, the cost of living index is 110, and in San Francisco, it is 170. You work in Las Vegas currently and your salary is $57,000. You are offered a promotion and pay raise of $70,000 to move to San Francisco. If you take the promotion:
 
 
 
 
 
 
 
 
 

90.
In Nation A, the price index rises from 110 to 120 in a particular year. In the same year, the price level rises from 120 to 130 in Nation B. This means:
 
 
92.
In the 1970s, the government attempted to regulate prices to control inflation; this attempt was unsuccessful. The most likely reason was that:
 
 
93.
In which year did deflation occur
 
 
94.
It has been shown that increases in the money supply are directly related to the rate of inflation. If the previous statement is true, then:
 
 
96.
It is rare when prices fall in modern times. However, it is likely that they would fall during severe recessions. What year is the most likely for this to have occurred?
 
 
97.
Jennifer earns $50,000 in her first job today while her mom used to make $15,000 in her first job in 1975. Jennifer is of the opinion that she makes more than her mom would have made if she started working today, while her mom thinks Jennifer would have earned less than she did had she started working in 1975. If the CPI today is 212 and the CPI in 1975 was 82, then
 
 
98.
Joe Kowalski invents a new product, and this new product becomes cheaper over time. This can be problematic because:
 
 
100.
Let’s say a bottle of Dr. Wells (an actual soft drink still available but hard to obtain) cost $0.15 in 1970. If the consumer price index (CPI) in 1970 was 37.8 and the current CPI is 240, then the inflation-adjusted price of Dr. Wells would be (rounded to the nearest penny):
 
 
101.
Let’s say a company invents a very popular device called a Zorgon, which allows you to send small items via a transporter from one place to another. This would affect the consumer price index (CPI) in the sense that the CPI
 
 
102.
Let’s say you plan to retire 40 years from now, and you decide you could live on $40,000 per year if you retired today. If the inflation rate is 3% between now and your retirement date, how much money per year would you need to have saved
 
 
103.
A loaf of bread cost $0.18 in 1955 and the CPI was 26.8. The CPI in 2013 was 233. The cost of a loaf of bread in 1955 using 2013 dollars would be
 
 
104.
McDonald’s charged $4.33 for its Big Mac burger in 2012. If the CPI in 2012 was 229 and the CPI in 2002 was 180, then how much would you have paid for the Big Mac back in 2002
 
 
105.
Medical care typically composes ____ of the typical consumer price index (CPI)
 
 
106.
Menu costs of inflation:
 
 
 
 
 
 
 
 
 
 

107.
Michael Chang buys only tennis rackets during a particular year. During the year in question, the price of all goods rises by 10% on average, but the price of tennis rackets remains the same. Michael also receives a pay increase based on inflation. Which statement is correct
 
 
108.
Michael Chang buys only tennis rackets during a particular year. During the year in question, the price of all goods rises by 10% on average, but the price of tennis rackets remains the same. Which statement is correct?
 
 
109.
Milton Friedman, who won the Nobel Prize in Economics, characterized inflation as being “high and variable.” These characteristics of inflation create problems because
 
 
110.
The movie Jaws grossed $260 million in 1975. What were the gross receipts for Jaws in 2012 dollars
 
 
111.
A movie ticket cost $0.75 in 1960. If movie tickets increased at the same rate as overall inflation, how much would the same movie ticket cost in 2012 dollars, if the CPI was 30 in 1960 and 230 in 2012
 
 
112.
One improvement of the chained consumer price index (CPI) over the traditional CPI is that
 
 
113.
Oranges become more expensive in 2008 at Ukrop’s in Charlottesville, Virginia. This means
 
 
114.
The percentage change in any economic variable, including the consumer price index (CPI), is measured by which equation?
 
 
115.
A price confusion problem is best described as:
 
 
116.
The price of a McDonald`s hamburger in 1955 was $0.15 when the price index was 27; if in 2011, it was $0.89 when the price index was 220, then the inflation-adjusted price of a McDonald`s hamburger in 2011 was:
 
 
118.
Quality changes:
 
 
119.
The rate of inflation ______ between 1980 and 1983
 
 
120.
The ratio of Price in an Earlier Time / Price in Today`s Time:
 
 
122.
Referring to the figure, we can observe that:
 
 
123.
Refer to the table below. This country produces only two goods CDs and books. You are told that the CPI for this country in 2012 was 141. If the base year is 2011, how many books should be present in the basket of goods and services that was used to calculate the CPI of 2012
 
 
 
 
 
 
 
 
 

124.
Say consumers buy two kinds of meat, beef and pork. If the price of pork doesn’t change and the price of beef rises over time, then consumers will typically buy more pork and less beef. If the Bureau of Labor Statistics fails to capture such substitution between goods in the CPI calculation, then this will result in
 
 
125.
The signing of long-term wage and price agreements and the relationship to inflation most likely raises the issue of:
 
 
126.
Suppose a basket of goods and services has been selected to calculate the consumer price index (CPI) and 2002 has been chosen as the base year. In 2002, the basket`s cost was $76.00; in 2004, the basket`s cost was $79.50; and in 2006, the basket`s cost was $85.00. The value of the CPI was:
 
 
128.
Suppose a basket of goods and services has been selected to calculate the consumer price index (CPI) and 2002 has been selected as the base year. In 2002, the basket`s cost was $600; in 2004, the basket`s cost was $650; and in 2006, the basket`s cost was $700. The value of the CPI in 2004 was (round to one decimal place):
 
 
130.
Suppose that the consumer price index of a country was 160 at Year X and 164 at the end of Year Y. What was the country`s inflation rate during Year Y?
 
 
131.
The table shown here gives a cost-of-living index for 14 different cities. If you are living and working in Phoenix and earning $100,700 per year, to have the same standard of living in Manhattan you would need
 
 
132.
The textbook shows that the inflation-adjusted movie receipts for Star Wars (released 1977) were $1,410,707,000 and the original receipts were $460,998,000. The implication is that
 
 
133.
The textbook shows that the inflation-adjusted movie receipts for Star Wars (released 1977) were $1,410,707,000 and the original receipts were $460,998,000. The implication is that:
 
 
134.
Three accuracy problems with the consumer price index (CPI) are:
 
 
135.
Tofu becomes more expensive in 2008 at Safeway/Vons in Laguna Nigel, California. This means:
 
 
136.
Typically if real wages fall, the quantity demanded of labor rises. If workers agree to 3% wage increases for a four-year period and inflation is more than 3%, then, based on this information alone:
 
 
 
 
 
 
 
 
 

138.
Typically the largest percentage category in the consumer price index (CPI) is:
 
 
140.
Usually in the United States and other advanced economies
 
 
142.
The value of the consumer price index (CPI) in 2011 was 229 compared to the base period, which will always have the value of:
 
 
143.
The value of the consumer price index (CPI) is best described as
 
 
144.
Wages are often tied to expected rates of inflation; thus one reason why inflation is important is that:
 
 
145.
The website that provides official inflation statistics is
 
 
146.
We pay higher prices for TVs today than people used to pay 10 years ago. This is due to
 
 
147.
What is the consumer price index (CPI)
 
 
148.
What is the difference between the consumer price index (CPI) and the gross domestic product (GDP) deflator?
 
 
149.
What percentage of consumers’ income was spent on fuels and utilities in December 2012?
 
 
151.
What was the rate of inflation from 1985 to 1995?
 
 
152.
Which of the following reflects a practical example of the price confusion problem?
 
 
153.
Which statement best represents the purpose for measuring annual inflation (or deflation)?
 
 
154.
You are offered two jobs, one in Chicago paying $67,000 and one in Dallas paying $58,000. The price index in Chicago is 110.8, and in Dallas it is 91.5. If real wages are the only consideration, then:
 
 
155.
You are offered two jobs, one in Chicago paying $67,000 and one in Philadelphia paying $79,000. The price index in Chicago is 110.8, and in Philadelphia it is 126.5. If real wages are the only consideration, then:
 
 
156.
You get a pay raise and feel richer even though your raise did not keep up with inflation; this is best described as:
 
 
157.
You have to pay costs for your business now but you also have to enter into long-term contracts to repay loans in the future. If inflation occurs, the best term for the problem that occurs in this case is:
 
 
158.
You know that the consumer price index (CPI) at the beginning of this year was 250 and the rate of inflation was 14%; this would mean:
 
 
 
 
 
 
 
 
 

159.
You own a store and have not raised prices recently and now your store has more customers. Which statement is correct?
 
 
160.
Your entertainment price index (EPI) was computed based on three goods: movie tickets, popcorn, and limeade. If you change the quantity of these goods from this year to next year and the prices of two of the three goods increase while the other price falls, then:
 
 
161.
Your firm expands its output in a time when demand appears to be increasing. Demand for all goods is increasing because of inflation, and consumers want to buy all goods faster because their real purchasing power is falling due to inflation. This situation could indicate that:
 
 
162.
Your nominal wage increases by 10%, and the overall price level increases by 12%. Which statement is correct?
 
 
 

 

2.
According to the consumer price index (CPI), in a particular year, the price of gasoline rises in the United States by 22%; simultaneously, the price of all food items falls by 8%. Which statement is correct?
 
 
3.
According to the price confusion problem, if the price of a product increases, then:
 
 
4.
According to the textbook, the fully completed house that one could buy from the Sears catalog in 1924 would be:
 
 
5.
According to the textbook, the top-grossing movie of all time (adjusted for inflation) is:
 
 
7.
Assume the price of salt increased from $0.30 in 1985 to $0.50 in 1995. If we calculate the average rate of price increase for salt over this period, we could accurately say:
 
 
8.
Assume tuition and fees at North Carolina State University cost $4,259 in 2004 and $7,787 in 2012. If the price index was 184 in 2004 and 226 in 2012, then we could say:
 
 
9.
Assume tuition at Houston Community College cost $588 (per semester) in 2004 and $813 in 2012. If the price index was 184 in 2004 and 226 in 2012, then we could say:
 
 
10.
Assume tuition at Penn State cost $6,142 (per semester) in 2007 and $7,562 in 2012. If the price index was 207.34 in 2007 and 226 in 2012, then we could say:
 
 
11.
Assume tuition at the University of Virginia cost $2,962 (per semester) in 2004 and $11,584 in 2012. If the price index was 184 in 2004 and 226 in 2012, then we could say:
 
 
12.
Assume you earned $30,000 in 2012, and the CPI in 2013 was 238. How much of a raise did you need, in dollars, to keep up with the change in the inflation rate?
 
 
14.
The Bureau of Labor Statistics releases consumer price index (CPI) data:
 
 
15.
The Bureau of Labor Statistics reported the consumer price index as 211.4 in December 2007, and 231.1 in December 2012. By what percentage did the index increase from the end of 2007 to the end of 2012 (rounded to one decimal place)?
 
 
16.
Chicken becomes more expensive in 2008 at Wegmans in State College, Pennsylvania. This means:
 
 
17.
The concept of a price index is that:
 
 
18.
Consider a nation in which the price index last year was 130 and this year it is 150. Which statement is correct?
 
 
19.
Consider a nation in which the price index was 150 last year and this year it is 130. Which statement is correct?
 
 
20.
Deflation:
 
 
21.
Deflation is best described as:
 
 
22.
Deflation is occurring in a nation; the implication(s) of this is/are:
 
 
23.
Education typically composes about:
 
 
24.
From 1960 until 2012, the long-run average rate of inflation in the United States was:
 
 
25.
Gas prices typically rise every summer as more people travel during the summer months. If the economy is in a recession and your friend tells you that gas prices are still rising during the summer months, which of the following is true?
 
 
26.
The housing crisis has some roots in inflation because:
 
 
27.
If 51% of all goods in the consumer price index (CPI) became more expensive and 49% became cheaper:
 
 
28.
If cheeseburgers become more expensive and consumers switch their purchases away from cheeseburgers but the consumer price index (CPI) still assumes they buy the same amount, then:
 
 
29.
If everyone buys the same goods every year and the price of housing rises by 38%:
 
 
30.
If healthcare costs make up 8% of total expenditures and they rise by 15% while the other components in the consumer price index remain constant, by how much will the price index rise?
 
 
31.
If housing prices increase by 25% and the price of all other goods decreases by 22%, then:
 
 
 
 
 
 
 
 
 
 
 

32.
If people bought the same market basket of goods as the average consumer again and again:
 
 
33.
If the consumer price index (CPI) was 100 in the period of 1982-1984, then:
 
 
34.
If the CPI today is 230, then the inflation rate since the base year is
 
 
35.
If the price index in 1922 was 17 and a unit of Nabisco Oreo cookies cost $0.32, and if the price index today is 220 and a unit of Nabisco Oreo cookies costs $2.99, then the inflation-adjusted price of Oreos is:
 
 
36.
If the price of a typical market basket of goods increased from about $20 in 1960 to $200 in early 2012, then it:
 
 
37.
If the price of industrial plastic injection molding machines rose by 20% and the price of oranges fell by 20%, then:
 
 
38.
If the value of the consumer price index (CPI) in 2013 was 135 and the value of the CPI in 2012 was 117, we could correctly say that:
 
 
39.
In 1940 you could buy a “nickel Pepsi” for (oddly enough) a nickel. If the price index in 1940 was 14 and the 2011 price index was 221, then the inflation-adjusted price of a Pepsi would be:
 
 
40.
In 1991, the Barenaked Ladies released their hit song “If I Had a Million Dollars.” How much money would the group need to have a million dollars’ worth of purchasing power in 2012? Note that the consumer price index in 1991 was 136.2 and in 2012 it was 230.0.
 
 
41.
In a particular nation, people buy a completely unique and different set of goods and services every year. None of the goods purchased in the new year are the same as any of the goods purchased in the previous year. Based on this information:
 
 
42.
In Bovania, cattle compose 48% of the consumer price index (CPI), housing composes 32%, and entertainment accounts for the remaining 20%. If, in a certain year, the price of cattle rises by 30% and the price of housing rises by 25%, then:
 
 
43.
In Bovania, milk constitutes 56% of the typical basket of goods for a typical consumer. Let’s say the price of milk rises by 4% and the prices of all other goods fall by 10%. Based on the information given, we can definitely say:
 
 
44.
In Bovania, milk constitutes 56% of the typical basket of goods for a typical consumer. Let’s say the price of milk rises by 7% and the prices of all other goods fall by 4%. Based on the information given, we can definitely say:
 
 
45.
In Country Z, the prices of goods are measured on an annual basis on the last day of the year. In Country Y, the prices of goods are measured on a weekly basis every Wednesday. Comparing the two countries based on this information:
 
 
46.
In December 2012, what percentage of a typical consumer’s income was spent on consumer goods and services found in the CPI?
 
 
47.
In Felixania, cat food constitutes 45% of the typical basket of goods for a typical consumer, dog food constitutes 3%, and all other goods constitute the remaining 52%. Assume the price of cat food rises by 4%, the price of dog food falls by 10%, and prices remain constant for all other goods. Based on the information given, we can definitely say:
 
 
 
 
 
 
 
 
 

48.
In Felixania, cat food constitutes 45% of the typical basket of goods for a typical consumer, dog food constitutes 3%, and all other goods constitute the remaining 52%. Assume the price of cat food rises by 4%, the price of dog food falls by 10%, and the prices for all other goods remain constant. Based on the information given, we can definitely say:
 
 
49.
Inflation in Zimbabwe in 2008:
 
 
50.
In Las Vegas, the cost of living index is 110, and in San Francisco, it is 170. You work in Las Vegas currently and your salary is $57,000. You are offered a promotion and pay raise of $70,000 to move to San Francisco. If you take the promotion:
 
 
51.
In Nation A, the price index rises from 110 to 120 in a particular year. In the same year, the price level rises from 120 to 130 in Nation B. This means:
 
 
52.
In which year did deflation occur?
 
 
53.
It is rare when prices fall in modern times. However, it is likely that they would fall during severe recessions. What year is the most likely for this to have occurred?
 
 
54.
Joe Kowalski invents a new product, and this new product becomes cheaper over time. This can be problematic because:
 
 
55.
Let’s say a bottle of Dr. Wells (an actual soft drink still available but hard to obtain) cost $0.15 in 1970. If the consumer price index (CPI) in 1970 was 37.8 and the current CPI is 240, then the inflation-adjusted price of Dr. Wells would be (rounded to the nearest penny):
 
 
56.
Let’s say a company invents a very popular device called a Zorgon, which allows you to send small items via a transporter from one place to another. This would affect the consumer price index (CPI) in the sense that the CPI:
 
 
57.
Let’s say you plan to retire 40 years from now, and you decide you could live on $40,000 per year if you retired today. If the inflation rate is 3% between now and your retirement date, how much money per year would you need to have saved?
 
 
58.
A loaf of bread cost $0.18 in 1955 and the CPI was 26.8. The CPI in 2013 was 233. The cost of a loaf of bread in 1955 using 2013 dollars would be
 
 
59.
McDonald’s charged $4.33 for its Big Mac burger in 2012. If the CPI in 2012 was 229 and the CPI in 2002 was 180, then how much would you have paid for the Big Mac back in 2002?
 
 
60.
Medical care typically composes ____ of the typical consumer price index (CPI).
 
 
61.
Michael Chang buys only tennis rackets during a particular year. During the year in question, the price of all goods rises by 10% on average, but the price of tennis rackets remains the same. Michael also receives a pay increase based on inflation. Which statement is correct?
 
 
62.
Michael Chang buys only tennis rackets during a particular year. During the year in question, the price of all goods rises by 10% on average, but the price of tennis rackets remains the same. Which statement is correct?
 
 
63.
Milton Friedman, who won the Nobel Prize in Economics, characterized inflation as being “high and variable.” These characteristics of inflation create problems because:
 
 
64.
Milton Friedman, who won the Nobel Prize in Economics, characterized inflation as being “high and variable.” These characteristics of inflation create problems because:
 
 
65.
The movie Jaws grossed $260 million in 1975. What were the gross receipts for Jaws in 2012 dollars?
 
 
66.
A movie ticket cost $0.75 in 1960. If movie tickets increased at the same rate as overall inflation, how much would the same movie ticket cost in 2012 dollars, if the CPI was 30 in 1960 and 230 in 2012?
 
 
 
 
 
 
 
 
 

67.
One improvement of the chained consumer price index (CPI) over the traditional CPI is that:
 
 
68.
Oranges become more expensive in 2008 at Ukrop’s in Charlottesville, Virginia. This means:
 
 
69.
The percentage change in any economic variable, including the consumer price index (CPI), is measured by which equation?
 
 
70.
The price of a McDonald’s hamburger in 1955 was $0.15 when the price index was 27; if in 2011, it was $0.89 when the price index was 220, then the inflation-adjusted price of a McDonald’s hamburger in 2011 was:
 
 
71.
The price of a McDonald’s hamburger in 1955 was $0.15 when the price index was 27; if in 2011, it was $0.89 when the price index was 220, then the inflation-adjusted price of a McDonald’s hamburger in 2011 was:
 
 
72.
The rate of inflation ______ between 1980 and 1983.
 
 
73.
The ratio of Price in an Earlier Time / Price in Today’s Time:
 
 
74.
Refer to the table below. This country produces only two goods CDs and books. You are told that the CPI for this country in 2012 was 141. If the base year is 2011, how many books should be present in the basket of goods and services that was used to calculate the CPI of 2012?
 
 
75.
Say consumers buy two kinds of meat, beef and pork. If the price of pork doesn’t change and the price of beef rises over time, then consumers will typically buy more pork and less beef. If the Bureau of Labor Statistics fails to capture such substitution between goods in the CPI calculation, then this will result in
 
 
76.
Say consumers buy two kinds of meat, beef and pork. If the price of pork doesn’t change and the price of beef rises over time, then consumers will typically buy more pork and less beef. If the Bureau of Labor Statistics fails to capture such substitution between goods in the CPI calculation, then this will result in
 
 
77.
The signing of long-term wage and price agreements and the relationship to inflation most likely raises the issue of:
 
 
78.
Suppose a basket of goods and services has been selected to calculate the consumer price index (CPI) and 2002 has been chosen as the base year. In 2002, the basket’s cost was $76.00; in 2004, the basket’s cost was $79.50; and in 2006, the basket’s cost was $85.00. The value of the CPI was:
 
 
79.
Suppose a basket of goods and services has been selected to calculate the consumer price index (CPI) and 2002 has been chosen as the base year. In 2002, the basket’s cost was $76.00; in 2004, the basket’s cost was $79.50; and in 2006, the basket’s cost was $85.00. The value of the CPI was:
 
 
80.
Suppose a basket of goods and services has been selected to calculate the consumer price index (CPI) and 2002 has been chosen as the base year. In 2002, the basket’s cost was $76.00; in 2004, the basket’s cost was $79.50; and in 2006, the basket’s cost was $85.00. The value of the CPI was:
 
 
81.
Suppose a basket of goods and services has been selected to calculate the consumer price index (CPI) and 2002 has been selected as the base year. In 2002, the basket’s cost was $600; in 2004, the basket’s cost was $650; and in 2006, the basket’s cost was $700. The value of the CPI in 2004 was (round to one decimal place):
 
 
 
 
 
 
 
 
 

82.
Suppose that the consumer price index of a country was 160 at Year X and 164 at the end of Year Y. What was the country’s inflation rate during Year Y?
 
 
83.
The table shown here gives a cost-of-living index for 14 different cities. If you are living and working in Phoenix and earning $100,700 per year, to have the same standard of living in Manhattan you would need
 
 
84.
The textbook shows that the inflation-adjusted movie receipts for Star Wars (released 1977) were $1,410,707,000 and the original receipts were $460,998,000. The implication is that:
 
 
86.
Tofu becomes more expensive in 2008 at Safeway/Vons in Laguna Nigel, California. This means:
 
 
87.
Typically the consumer price index (CPI) is calculated by:
 
 
88.
Typically the largest percentage category in the consumer price index (CPI) is:
 
 
89.
Usually in the United States and other advanced economies:
 
 
90.
The value of the consumer price index (CPI) in 2011 was 229 compared to the base period’s, which will always have the value of:
 
 
91.
The value of the consumer price index (CPI) is best described as:
 
 
92.
The website that provides official inflation statistics is:
 
 
93.
We pay higher prices for TVs today than people used to pay 10 years ago. This is due to
 
 
94.
What percentage of consumers’ income was spent on fuels and utilities in December 2012?
 
 
95.
What was the rate of inflation from 1985 to 1995?
 
 
96.
Which statement best represents the purpose for measuring annual inflation (or deflation)?
 
 
 
 
 
 
 
 
 

 

1.
According to the information in the survey, the number of people in the labor force is
 
 
2.
According to the information in the survey, the number of people in the work-eligible population is
 
 
3.
Arguably, interest represents:
 
 
4.
As presented in the figure, one could correctly state that
 
 
5.
As presented in the table, the approximate rate of inflation (or deflation) during 2000-2001 was (rounded to the nearest percent)
 
 
7.
Assume tuition at Houston Community College cost $588 (per semester) in 2004 and $813 in 2012. If the price index was 184 in 2004 and 226 in 2012, then we could say
 
 
8.
Based on the relationship between consumption and income, someone in his or her “prime earning years” is most
 
 
9.
The best measure of the average living standards of people in the country is the
 
 
10.
Between 1960 and 2012, the average unemployment rate in the United States was about
 
 
11.
Between quarter 10 and quarter 11, real gross domestic product (GDP) grew by what percentage?
 
 
12.
Borrowers in the loanable funds market consist of
 
 
13.
By 1981
 
 
14.
by 2015
 
 
15.
The chained consumer price index (CPI) tends to more accurately reflect prices by updating the consumer basket of goods
 
 
16.
Chicken becomes more expensive in 2008 at Wegmans in State College, Pennsylvania. This means
 
 
17.
Consider the following figure to answer the following questions:


In which year was the economy growing at the long-run average growth rate
 
 
18.
Deflation
 
 
19.
The demand for loanable funds increases while the supply of loanable funds remains constant. This would cause
 
 
20.
Donna Newton made $0.30 per hour in 1946 at a small restaurant in Clearfield, Pennsylvania. If the consumer price index (CPI) was 18.3 in 1946 and 202.4 in 2011, then Donna’s inflation-adjusted wage would be
 
 
21.
During a recession, fewer individuals fly across the country for vacations. As a result, many pilots and flight attendants lose their jobs. These individuals would be classified as
 
 
22.
During healthy economic periods, cyclical unemployment
 
 
23.
Economic growth is best measured by changes in
 
 
24.
Education typically composes about ________ of the consumer price index (CPI).
 
 
25.
Employment data is released
 
 
26.
Every ________ requires a ________.
 
 
27.
Firms expect more sales and profits in the near future; this would cause
 
 
28.
The government adopts new regulation that requires all firms to contribute to their employees’ retirement funds. All else the same, we would expect ________ unemployment to ________.
 
 
29.
The government engages in more deficit spending. Ceteris paribus (all else equal), this would cause
 
 
30.
Government salaries paid to soldiers in the military are included in the ________ category of gross domestic product (GDP).
 
 
31.
Holding all else constant, if people who are currently discouraged workers decide to start looking for jobs again, you will see
 
 
32.
If household wealth rises and capital becomes less productive, we would correctly say that
 
 
34.
If nominal gross domestic product (GDP) is increasing, which of the following may be true?
 
 
35.
If nominal income increases, then real income
 
 
36.
If over a period of time real gross domestic product (GDP) decreases while nominal GDP increases, then this implies
 
 
37.
If real interest rates fell between 1981 and 2012, then
 
 
 
 
 
 
 
 
 
 
 

38.
If the economy is expanding beyond its long-run capabilities, we know that
 
 
39.
In Bovania, milk constitutes 56 percent of the typical basket of goods for a typical consumer. Let’s say the price of milk rises by 4 percent and the prices of all other goods fall by 10 percent. Based on the information given, we can definitely say
 
 
40.
Inflation sometimes causes people to pay ________ capital gains tax than they ought to, ________.
 
 
41.
An interest rate best represents ________ to borrowers and ________ to savers.
 
 
42.
The Internet has enabled workers and companies to find each other more quickly and to make better matches with substantially lower costs. The result is
 
 
43.
In the figure, line 2 represents the ________, and at an interest rate of 6 percent a ________ of loanable funds exists.
 
 
44.
In which direction does a surge of inflation redistribute wealth?
 
 
45.
It is likely that as more baby boomers reach retirement,
 
 
46.
Jamal works in a factory in Lake Zurich, Illinois, assembling toy trains. The factory owner updates the current equipment and installs new robots that can do Jamal’s job. As a result, Jamal is laid off and is now unemployed. Jamal would be considered
 
 
47.
Let’s say a bottle of Dr. Wells (an actual soft drink still available but hard to obtain) cost $0.15 in 1970. If the consumer price index (CPI) in 1970 was 37.8 and the current CPI is 240, then the inflation-adjusted price of Dr. Wells would be (rounded to the nearest penny)
 
 
48.
Let’s say a company invents a very popular device called a Zorgon, which allows you to send small items via a transporter from one place to another. This would affect the consumer price index (CPI) in the sense that the CPI
 
 
49.
The main statistic that is used to monitor unemployment in the economy is
 
 
50.
The market value of cell phones is
 
 
51.
Menu costs of inflation
 
 
52.
Most people have a time preference. Since this is true, they
 
 
53.
A nonprice determinant of the supply of loanable funds would be
 
 
54.
The phase of the business cycle where the economy is growing faster than usual is called
 
 
55.
A price confusion problem is best described as the
 
 
56.
The ratio (Price Level in Earlier Time) / (Price Level Today) would be used to
 
 
57.
A shortcoming of real gross domestic product (GDP) is it
 
 
58.
The signing of long-term wage and price agreements and the relationship to inflation most likely raises the issue of
 
 
59.
Some individuals are unemployed because it takes time for them to find jobs that fit their skill sets. These individuals would be considered to be
 
 
60.
The supply of loanable funds comes from
 
 
 
 
 
 
 
 
 

61.
Suppose 5,000 discouraged workers begin to look for jobs. In this case the number of people in the work-eligible population will be ________ and the number of people in the labor force will be ________.
 
 
62.
Suppose the number of people who retire is greater than the number of people who enter the workforce and find jobs. All else the same, the labor force participation rate will ________ and the unemployment rate will ________.
 
 
63.
To calculate the labor force participation rate, you only need to know the
 
 
64.
The unemployment rate is the percentage of the
 
 
65.
The wealth-redistribution effect of inflation requires that the inflation be
 
 
66.
What is the value of real gross domestic product (GDP) in 2010? Round to the nearest second decimal.
 
 
67.
What was the gross domestic product (GDP) deflator in 2013?
 
 
68.
What was the growth rate of nominal gross domestic product (GDP) from 2010 to 2011? Round to the nearest second decimal.
 
 
69.
What was the growth rate of real gross domestic product (GDP) from 2011 to 2012?
 
 
70.
When gross domestic product (GDP) increases, national income ________ and national output ________.
 
 
71.
When it is difficult to hire employees, firms take ________ to hire, which increases ________ unemployment.
 
 
72.
Which description implies a drop in interest rates?
 
 
73.
Which event could be expected to shift a nation’s supply of loanable funds, as shown?
 
 
74.
Which of the following conditions might cause the unemployment rate to be less than the natural rate of unemployment?
 
 
75.
Which of the following is an example of frictional unemployment?
 
 
76.
Which of the following is a topic of microeconomics?
 
 
77.
Which of the following people would be officially considered unemployed?
 
 
78.
Which of the following statements about unemployment is true?
 
 
79.
Which statement best represents the purpose for measuring annual inflation (or deflation)?
 
 
80.
Why does increased productivity of capital shift the demand for loanable funds?
 
 
81.
You borrow $10,000 today at a nominal rate of 5 percent; inflation for the past 10 years has been exactly 2 percent. Today, inflation instantly rises to 4 percent and stays that way for the duration of your loan. Based on the above information and all else being equal, today
 
 
82.
You borrow $10,000 today at a nominal rate of 5 percent; inflation for the past 10 years has been exactly 2 percent. Today, inflation instantly rises to 7 percent and stays that way for the duration of your loan. Based on the above information, ceteris paribus (all else equal), today
 
 
 
 
 
 
 
 
 

83.
You deposit $1,000 in the bank and leave it for five years at 3 percent annual interest, making no additional transactions on this account. At the end of the five years, you withdraw the principal and any accumulated interest; the amount you would withdraw would be
 
 
84.
A young boy is saving money for a baseball bat but is tempted to buy an ice cream cone. If the boy successfully resists buying ice cream and continues to save for the bat, the boy has
 
 
85.
A young girl is saving money for a soccer ball but is tempted to buy a book. If the girl buys a book rather than continuing to save for the ball, the
 
 
 

 

1.
The 45 degree line in the Keynesian model represents:
 
 
2.
According to the figure, deflation was occurring:
 
 
3.
According to the graph above, the economy experienced economic contraction from:
 
 
4.
According to the graph, u<u* between:
 
 
5.
According to the table above, which country has the lowest standard of living?
 
 
6.
According to the table, the labor force participation rate in this economy is equal to:
 
 
7.
According to the table, the unemployment rate in the economy is equal to:
 
 
8.
All of the following would result in (a) except for:
 
 
9.
Assume that the economy starts at AD1. A change in the quality or quantity of resources will....
 
 
10.
Based on the figure above, a movement from A to C is a result of:
 
 
12.
A company produces a computer. They pay $100 for the keyboard and outer case, $200 for the internal hardware, and $100 for the software. They sell it to a consumer for $500. The contribution to GDP is:
 
 
13.
The country’s long run average growth rate is 3%. How many quarters were spent in recession?
 
 
14.
The demand and supply of loanable funds increase simultaneously. This would cause:
 
 
15.
Frictional unemployment is:
 
 
16.
If 51% of all goods in the CPI became more expensive and 49% became cheaper:
 
 
17.
If a jobless person has not sought a job in _____ weeks, that person is not counted in the unemployment statisitcs.
 
 
18.
If an economy’s GDP will double in 25 years, then its growth rate must be about:
 
 
19.
If real GDP grew by 4% and nominal GDP grew by 3%, then the inflation rate was
 
 
20.
If the price of industrial plastic injection molding machines rose by 20% and the price of oranges fell by 20% then:
 
 
21.
In Bovania, cattle compose 48% of the CPI, housing composes 32%, and entertainment accounts for the remaining 20%. If, in a certain year, the price of cattle rises by 30% and the price of housing rises by 25%, then:
 
 
22.
Individuals who are working part time but would prefer to be working full time are defined as:
 
 
23.
In the 2028 State of Union address, the president proudly proclaims that the unemployment rate went down by 3% since last year......
 
 
24.
List the components of US GDP in descending order of size (measured as a percentage of GDP)
 
 
25.
The main flaw of CPI is:
 
 
27.
Nominal GDP increased from $15.62 trillion to $16.09 trillion, and the price level increased from 120 to 122.4. The growth rate of real GDP was approx:
 
 
28.
Real GDP measures all of the following except:
 
 
29.
Some jobs in the economy are no longer needed after an advancement in technology. A person who loses his job this way would be considered:
 
 
30.
Suppose a basket of goods and services has been selected to calculate the CPI and 2003 has been selected as the base year. In 2003 the baskets cost was $600; in 2004, the baskets’s cost was $700. The value of the CPI in 2004 was
 
 
31.
Suppose that the MPC = .7 A stimulus investment of $80 billion will result in _____ of new spending.
 
 
32.
Suppose that the nominal interest rate is 7%, the anticipated real interest rate is 4%, and the predicted inflation rate is 3%. If the real inflation rate turns out to be 4% instead, then:
 
 
33.
Suppose that the US dollar becomes more valuable relative to other currencies around the world, ceteris paribus. This will....
 
 
34.
To determine the value of GDP you would:
 
 
35.
When economic output is equal to full employment output, which of the following is true?
 
 
 
 
 
 
 
 
 
 
 

36.
When GDP increases, national income __________ and national output __________
 
 
37.
Which of the following is included in the govt purchases category of GDP?
 
 
38.
While experiencing hyperinflation, many grocery stores purchased new sticker pricing machines in order to keep up with changing prices. This is an example of ___________ when the cost of inflation is _____________
 
 
39.
You are offered two jobs, one in Richmond VA, paying $67,000 and one in San Diego, California, paying $79,000. The price index in Richmond is 104.5, and in San Diego the price index is 132.3. If real wages are the only consideration, then:
 
 
40.
You know that the PPI at the beginning of this year was 250 and the rate of inflation was 14%; this would mean