eco 4

QN=81 (17792) When the consumer price index rises, the typical family

• a. has to spend more dollars to maintain the same standard of living.

• b. can spend fewer dollars to maintain the same standard of living.

• c. finds that its standard of living is not affected.

• d. can offset the effects of rising prices by saving more.

QN=82 (17796) Table 24-1The table below pertains to Pieway, an economy in which the typical consumer's basket consists of 10 bushels of peaches and 15 bushels of pecans.Refer to Table 24-1. If 2005 is the base year, then the CPI for 2005 was

• a. 83.3

• b. 100.0

• c. 120.0

• d. 200.0.

QN=83 (17801) The consumer price index was 225 in 2006 and 236 in 2007. The nominal interest rate during this period was 6.5 percent. What was the real interest rate during this period?

• a. 1.6 percent

• b. 4.9 percent

• c. 6.82 percent

• d. 11.4 percent

QN=84 (17820) Scenario 24-4Quinn has job offers in Wrexington and across the country in Charlieville. The Wrexington job would pay a salary of $50,000 per year, and the Charlieville job would pay a salary of $40,000 per year. The CPI in Wrexington is 150, and the CPI in Charlieville is 90.Refer to Scenario 24-4. If Quinn only cares about maximizing her purchasing power, then she should

• a. take the Charlieville job.

• b. take the Wrexington job.

• c. take either job because they both have the same purchasing power.

• d. The answer cannot be determined from the information given because a salary is not the same as purchasing power.

QN=85 (17805) Economists use the term inflation to describe a situation in which

• a. some prices are rising faster than others.

• b. the economy's overall price level is rising.

• c. the economy's overall price level is high, but not necessarily rising

• d. the economy's overall output of goods and services is rising faster than the economy's overall price level.

QN=86 (17803) Most, but not all, athletic apparel sold in the United States is imported from other nations. If the price of athletic apparel increases, the GDP deflator will

• a. increase less than will the consumer price index.

• b. increase more than will the consumer price index.

• c. not increase, but the consumer price index will increase

• .d. increase, but the consumer price index will not increase.

QN=87 (17814) The price of domestically produced DVD players increases dramatically, causing a 1 percent increase in the CPI. The price increase will most likely cause the GDP deflator to increase by

• a. (i) more than 1 percent

• b. (ii) less than 1 percent.

• c. (iii) 1 percent

• d. None of (i), (ii), and (iii) is correct; this particular price increase will not affect the GDP deflator.

QN=88 (17813) The price index was 120 in 2006 and 127.2 in 2007. What was the inflation rate?

• a. 5.7 percent

• b. 6.0 percent

• c. 7.2 percent

• d. 27.2 percent

QN=89 (17809) The GDP deflator reflects the

• a. level of prices in the base year relative to the current level of prices.

• b. current level of prices relative to the level of prices in the base year.

• c. level of real output in the base year relative to the current level of real output

• d. current level of real output relative to the level of real output in the base year.

QN=90 (17793) In the CPI, goods and services are weighted according to

• a. how long a market has existed for each good or service.

• b. the extent to which each good or service is regarded by the government as a necessity.

• c. how much consumers buy of each good or service.

• d. the number of firms that produce and sell each good or service.