econ quiz - Question MC #81 Suppose the price of gasoline...

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Question MC #81 Suppose the price of gasoline increases rapidly, and that consumers respond by buying a smaller quantity of gasoline. The consumer price index Student response: Percen t Value Correct Response Student Response Answer Choices 0.0% a. reflects this price increase accurately. 0.0% b . understates the price increase due to the so- called income bias. 0.0% c. overstates the price increase due to the so- called income bias. 100.0% d . overstates the price increase due to the so- called substitution bias. Correct. Score:1 / 1 Question 2 (1 point) Question MC #62 The price index was 128.96 in 2006 and, between 2005 and 2006, the inflation rate was 24 percent. The price index in 2005 was Student response: Percent Value Correct Response Student Response Answer Choices 0.0% a. 30.95. 100.0% b. 104.00. 0.0% c. 104.96. Incorrect. 0.0% d. 106.67. Score:0 / 1 Question 3 (1 point) Question MC #83 The substitution bias in the consumer price index refers to the Student response: Percen t Value Correct Response Student Response Answer Choices
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0.0% a. substitution by consumers of new goods for old goods. 0.0% b . substitution by consumers of a smaller number of high-quality goods for a larger number of low-quality goods. 100.0% c. fact that consumers substitute toward goods that have become relatively less expensive. Correct. 0.0% d . substitution of new prices for old prices in the CPI basket of goods and services from one year to the next. Score:1 / 1 Question 4 (1 point) Question MC #80 One of the widely-acknowledged problems with the consumer price index (CPI) as a measure of the cost of living is that the CPI Student response: Percen t Value Correct Response Student Response Answer Choices 0.0% a. fails to account for consumer spending on housing. 0.0% b . accounts only for consumer spending on food, clothing, and energy. 0.0% c. fails to account for the fact that consumers spend larger percentages of their incomes on some goods and smaller percentages of their incomes on other goods. 100.0% d . fails to account for the introduction of new goods. Correct. Score:1 / 1 Question 5 (1 point) Question MC #136 You know that a candy bar cost five cents in 1962. You also know the CPI for 1962 and the CPI for today. Which of the following would you use to compute the price of the candy bar in today's prices? Student response: Percen Correct Student Answer Choices
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t Value Response Response 0.0% a. five cents (1962 CPI/ today's CPI) 0.0% b . five cents (1962 CPI/(today's CPI - 1962 CPI)) 100.0% c. five cents (today's CPI/1962 CPI) 0.0% d . five cents today's CPI - five cents 1962 CPI. Score:0 / 1 ( Question not answered. ) Question 6 (1 point) Question MC #175 Ralph puts money in the bank and earns a 5 percent nominal interest rate. Then, if the inflation rate is 3 percent, Student response: Percen t Value Correct Response Student Response Answer Choices 0.0% a. Ralph will have 3 percent more money, which will purchase 2 percent more goods. 0.0%
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This note was uploaded on 04/17/2008 for the course ECON 2100 taught by Professor Klimenko during the Spring '08 term at Georgia Institute of Technology.

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econ quiz - Question MC #81 Suppose the price of gasoline...

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