Chapter 24 (B)

76. Recent changes in methods used to compute the CPI have

• A.increased the upward bias in the CPI inflation rate.
• B.reduced the upward bias in the CPI inflation rate.
• C. increased the downward bias in the CPI inflation rate.
• D.reduced the downward bias in the CPI inflation rate.

77. The measurement problems in the consumer price index as an indicator of the cost of living are important because

• A.high rates of inflation cause voters to become unhappy.
• B.politicians have manipulated the measurement problems to their advantage.
• C. many government programs use the CPI to adjust for changes in the overall level of prices.
• D.if the price level is overstated consumers will be taken advantage of by sellers of consumer goods.

78. 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.

79. An important difference between the GDP deflator and the consumer price index is that

• A.the GDP deflator reflect s the prices of goods and services bought by producers, whereas the consumer price index reflect s the prices of goods and services bought by consumers.
• B.the GDP deflator reflect s the prices of all final goods and services produced domestically, whereas the consumer price index reflect s the prices of some goods and services bought by consumers.
• C. the GDP deflator reflect s the prices of all final goods and services produced by a nation's citizens, whereas the consumer price index reflect s the prices of final goods and services bought by consumers.
• D.the GDP deflator reflect s the prices of all goods and services bought by producers and consumers, whereas the consumer price index reflect s the prices of final goods and services bought by consumers.

80. If the prices of Australian-made shoes imported into the United States increase,

• A.both the GDP deflator and the consumer price index will increase.
• B.neither the GDP deflator nor the consumer price index will increase.
• C. the GDP deflator will increase but the consumer price index will not increase.
• D.the consumer price index will increase, but the GDP deflator will not increase.

81. An increase in the price of domestically produced industrial robots will be reflected in

• A.both the GDP deflator and the consumer price index.
• B.neither the GDP deflator nor the consumer price index.
• C. the GDP deflator but not in the consumer price index.
• D.the consumer price index but not in the GDP deflator .

82. By itself a reduction in the price of large tractors imported into the United States from Russia will

• A.make the GDP deflator decrease and the consumer price index to increase.
• B.make the GDP deflator increase, but the consumer price index is unchangeD.
• C. will increase both the GDP deflator and the consumer price index.
• D.will not change either the GDP deflator or the consumer price index.

83. An increase in the price of dairy products produced domestically will be reflect ed in

• A.both the GDP deflator and the consumer price index.
• B.neither the GDP deflator nor the consumer price index.
• C. the GDP deflator but not in the consumer price index.
• D.the consumer price index but not in the GDP deflator .

84. In the United States, if the price of imported oil rises so that the price of gasoline and heating oil rise the

• A.GDP deflator rises much more than does the consumer price index.
• B.consumer price index rises much more than does the GDP deflator .
• C. GDP deflator and the consumer price index rise by about the same amount.
• D.consumer price index rises slightly more than does the GDP deflator .

85. 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.