# cpi - 1 The steps involved in calculating the consumer...

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1. The steps involved in calculating the consumer price index include, in order: a. choose a base year, fix the basket, compute the inflation rate, compute the basket’s cost, and compute the  index. b. choose a base year, find the prices, fix the basket, compute the basket’s cost, and compute the index. c. fix the basket, find the prices, compute the basket’s cost, choose a base year and compute the index. d. fix the basket, find the prices, compute the inflation rate, choose a base year and compute the index. 2. Suppose that the typical consumer basket consists of 10 bushels of peaches and 15 bushels of pecans and that  the base year is 2000. What is the consumer price index for 2001? a. 100 b. 120 c. 200 d. 240 3. The inflation rate is calculated a. from a survey of consumer spending. b. by adding up the price increases of all goods and services. c. by computing a simple average of the price increase in all goods and services. d. by determining the percentage increase in the price index from the preceding period. 4. If this year the CPI is 125 and last year it was 120, then we know that a. all goods have become more expensive. b. the price level has increased. c. the inflation rate has increased. d. All of the above are correct.

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5. If the price index in the first year was 90, in the second year was 100, and in the third year was 95, the economy  experienced a. 10 percent inflation between the first and second years and 5 percent inflation between the second and third  years. b.
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cpi - 1 The steps involved in calculating the consumer...

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