macroeco WA

The CPI was 238 in one year and 244 the following year.

How much did prices rise between these two years?

• 2.46 percent

• 5.50 percent

• 2.52 percent

• 0.03 percent

Suppose the market basket consists of 100X, 200Y, and

300Z. Current-year prices are $5 for each unit

of X, $2 for each unit of Y, and $3 for each unit of Z.

Base-year prices are $2 for each unit of X, Y,

and Z. What is the approximate CPI in the current year?

• 15

• 70.20

• 1,200

• 150

One measure of the inflation rate is the

• sum of the CPIs of adjacent years.

• percentage change in the CPI of adjacent years.

• percentage change in the Real GDP of adjacent years.

• GDP minus the Real GDP in a year

If the CPI is 100 in the base year and 112 in

the current year, how much did prices rise

between the base year and the current year?

• 12 percent

• 112 percent

• 1.2 percent

• 0.12 percent

Suppose that the basket of goods in the CPI consisted of 3 units of chicken and 2 units of corn. What is the inflation rate

for 2004?

• 33.3 percent

• 25 percent

• 20 percent

• 15 percent

Macroeconomics studies the behavior of individual households and firms.

• true

• false

An increase in government spending will always lead to an increase in aggregate demand.

• true

• false

A decrease in interest rates leads to a decrease in investment.

• true

• false

The Phillips curve suggests that there is a direct relationship between inflation and unemployment.

• true

• false

Fiscal policy changes have immediate effects on the economy.

• true

• false