Sample+Questions+for+Quiz+1

Sample+Questions+for+Quiz+1 - Econ 1/IS 13 Sample Questions...

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Econ 1/IS 13 Sample Questions for Quiz 1 1. If the current year CPI is 140, then the price level has increased 40 percent since the base year. TRUE or FALSE? 2. Briefly explain the three major problems in using the CPI as a measure of the cost of living. 3. Identify the immediate effect of each of the following events on U.S. GDP and its components. a. James receives a Social Security check. b. John buys an Italian sports car. c. Henry buys domestically produced tools for his construction company. 4. In a simple economy, people consume only 2 goods, food and clothing. The market basket of goods used to compute the CPI consists of 50 units of food and 10 units of clothing. a. What are the percentage increases in the price of food and in the price of clothing? b. What is the percentage increase in the CPI? c. Do these price changes affect all consumers to the same extent? Explain. 5. Which is likely to have the larger effect on the CPI, a 2 percent increase in the price of food or a 3 percent increase in the price of diamond rings? Explain.
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Sample+Questions+for+Quiz+1 - Econ 1/IS 13 Sample Questions...

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