Question 1

Inflation:

Accepted Answer

A)  doesn't necessarily harm purchasing power.
B)  always decreases purchasing power.
C)  always increases purchasing power.
D)  should try to be avoided at all costs.E) All of the above
F) B) and D)

Question 2

In an attempt to separate the quality changes from price changes of a product over time,the BLS does a:

Accepted Answer

A)  hedonic quality adjustment.
B)  heterogenic quality adjustment.
C)  qualitative price change.
D)  qualitative market adjustment.E) A) and D)
F) B) and D)

Question 3

When Social Security checks were first issued:

Accepted Answer

A)  the nominal amount stayed the same for the life of the payments.
B)  the nominal amount was regularly increased by 5 percent every 3 months.
C)  the nominal amount was regularly increased by 10 percent every 3 years.
D)  the nominal amount was regularly increased by 3 percent every 5 years.E) A) and B)
F) A) and C)

Question 4

Social Security payments:

Accepted Answer

A)  continue to cause the elderly to lose income over time,since payments are not adjusted for inflation.
B)  cause concern for Congress,due to the increase in life expectancies.
C)  now hold their real value.
D)  None of these statements is true.E) B) and C)
F) A) and D)

Question 5

The consumers that the CPI is based on includes:

Accepted Answer

A)  bank tellers.
B)  greeters at Walmart.
C)  retired persons.
D)  All of these are included.E) None of the above
F) A) and C)

Question 6

When we say the cost of living has gone down,we mean that,looking broadly over a range of goods and services:

Accepted Answer

A)  a dollar buys less today than it used to buy.
B)  a dollar buys more today than it used to buy.
C)  a dollar buys the same today as it used to buy.
D)  our income has increased to match the cost of those goods.E) A) and D)
F) All of the above

Question 7

The Big Mac index:

Accepted Answer

A)  is measured by The Economist.
B)  is a simple measure that indicates differing costs of living in different countries.
C)  converts the price of a Big Mac worldwide to dollars,and compares it to how much they cost in the U.S.
D)  All of these statements are true.E) B) and D)
F) A) and D)

Question 8

The "urban consumers" that the CPI is based on includes:

Accepted Answer

A)  anyone living in a city of 2,500 or more.
B)  anyone living in a city of 5,000 or more.
C)  anyone living in a city of 10,000 or more.
D)  anyone living in a city of 15,000 or more.E) None of the above
F) All of the above

Question 9

When the market basket is tracked over time:

Accepted Answer

A)  the goods within the basket remain the same,so only changing prices are captured.
B)  the goods within the basket reflect the typical consumer each year,so it captures how consumers are affected each year.
C)  the goods within the basket reflect the typical consumer each year,but prices are held constant,so it captures if we are consuming more or less as an economy.
D)  None of these statements is true.E) A) and B)
F) A) and C)

Question 10

Which of the following goods is least likely to be in a market basket?

Accepted Answer

A)  Helicopter
B)  Gasoline
C)  Barbie dolls
D)  Breakfast cerealE) All of the above
F) None of the above

Question 11

Suppose we want to know how much money your grandparents would have to earn now to have purchasing power equivalent to their income in 1969.We could:

Accepted Answer

A)  translate their nominal income in 1969 into constant,real dollars of today.
B)  translate their nominal income today into 1969 dollars.
C)  take a ratio of their income today with their income from 1969.
D)  None of these statements is true.E) B) and D)
F) All of the above

Question 12

Cost-of-living adjustments are:

Accepted Answer

A)  indexed payments.
B)  not common in the U.S.
C)  used to automatically keep the real value of salaries or other payments constant,without having to renegotiate contracts or pass new laws.
D)  All of these statements are true.E) None of the above
F) B) and D)

Question 13

The market basket approach:

Accepted Answer

A)  gives us a single number that represents how changing prices affect the typical consumer.
B)  gives us a list of what the typical consumer buys and the average price change of those goods.
C)  tells us how the prices of all goods and services in an economy change over time.
D)  All of these statements are true.E) C) and D)
F) None of the above

Question 14

The most commonly used price index to track changes in prices for the typical household in the U.S.is:

Accepted Answer

A)  consumer price index.
B)  basket price index.
C)  retail price index.
D)  producer price index.E) All of the above
F) A) and C)

Question 15

Regardless of the index we use:

Accepted Answer

A)  inflation is measured as a percent increase in the index from one year to the next.
B)  we get the same measurements for inflation,so each is equally useful.
C)  the measurement of inflation is the same,so we use the one easiest to calculate.
D)  All of these statements are true.E) A) and B)
F) A) and C)

Question 16

A good that is most likely to be in the producer price index is:

Accepted Answer

A)  industrial machinery.
B)  light trucks.
C)  soft lumber.
D)  All of these are in the PPI.E) C) and D)
F) A) and C)

Question 17

The consumers that the CPI is based on includes:

Accepted Answer

A)  "urban consumers."
B)  professors.
C)  unemployed persons.
D)  All of these are included.E) A) and B)
F) A) and C)

Question 18

In 1976,the cost of a movie was $4.In 2012,it's $9.If the CPI for 1976 is 56,and 228 for 2012,to find the real 2012 value of a 1976 movie,we would multiply its nominal value in 1976 by the ratio of:

Accepted Answer

A)  (56/228) .
B)  (228/56) .
C)  (9/5) .
D)  (5/9) .E) B) and D)
F) B) and C)

Question 19

When the CPI increases from one year to the next:

Accepted Answer

A)  inflation has occurred.
B)  deflation has occurred.
C)  there has not been a change in the overall price level.
D)  the impact to the general standard of living is hard to measure.E) None of the above
F) A) and D)

Question 20

The CPI attempts to:

Accepted Answer

A)  balance out the consumption of different types of people in different life stages.
B)  balance out the consumption of different types of people in different life situations.
C)  capture an average across a very large group of U.S.consumers.
D)  All of these statements are true.E) None of the above
F) All of the above

Exam 25: The Cost of Living

In 1976,the cost of a movie was $4.In 2012,it's $9.If the CPI for 1976 is 56,and 228 for 2012,to find the real 2012 value of a 1976 movie,we would multiply its nominal value in 1976 by the ratio of:

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Cost-of-living adjustments are:

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Suppose we want to know how much money your grandparents would have to earn now to have purchasing power equivalent to their income in 1969.We could:

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When the CPI increases from one year to the next:

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Which of the following goods is least likely to be in a market basket?

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When the market basket is tracked over time:

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The most commonly used price index to track changes in prices for the typical household in the U.S.is:

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When Social Security checks were first issued:

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Inflation:

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The Big Mac index:

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In an attempt to separate the quality changes from price changes of a product over time,the BLS does a:

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Regardless of the index we use:

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A good that is most likely to be in the producer price index is:

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The consumers that the CPI is based on includes:

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The "urban consumers" that the CPI is based on includes:

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When we say the cost of living has gone down,we mean that,looking broadly over a range of goods and services:

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The CPI attempts to:

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The market basket approach:

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The consumers that the CPI is based on includes:

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Social Security payments:

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