Chapter 8--MacroTB - CHAPTER 8 Inflation MULTIPLE-CHOICE 1...

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MULTIPLE-CHOICE 1. The quote “Inflation is always and everywhere a monetary phenomenon” is attributed to a. Karl Marx. b. Thomas Sargent. c. Milton Friedman. d. Alan Greenspan. e. David Ricardo. Answer: c. Section: 8.1 2. The quote “Inflation is always and everywhere a fiscal phenomenon” is attributed to a. Adam Smith. b. Thomas Sargent. c. Karl Marx. d. Alan Greenspan. e. David Ricardo. Answer: b. Section: 8.1 3. Inflation is calculated as a. the overall price level. b. the rate of change of the price level. c. the percentage change in the price level. d. the difference in the price level. e. a and b. Answer: c. Section: 8.1 4. If P t is the price level in time t , inflation is calculated as a. 1/ P t . b .P t +1 / P t . c t +1 P t . d t / P t +1 . e . Δ P t / P t . Answer: e. Section: 8.1 5. When discussing inflation, we generally speak of it in terms of a. the percent change in the consumer price index. b. the percent change in the GDP deflator. c. the level of the consumer price index. d. one over the consumer price index. e. a or b. Answer: e. Section: 8.1 6. Contributing to Reagan defeating Carter in the 1980 presidential election was a. double-digit inflation. b. the low rate of unemployment. c. the takeover of the U.S. embassy in Tehran, Iran. d. Billy Carter’s beer. e. a and c. Answer: a. Section: 8.1 7. In 1979 President Carter appointed __________ as chairman of the Board of Governors of the Federal Reserve to battle __________. a. Greenspan; inflation b. Volcker; the Soviet Union c. Volcker; inflation d. Bernanke; unemployment e. Powell; Ayatollah Khomeini Answer: c. Section: 8.1 74 Inflation CHAPTER 8
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Infation | 75 8. In 1979, in the face of rising competition in the fast food hamburger market, McDonald’s reduced the price of its cheeseburger to $0.43. If the CPI in 1979 was 36 and the CPI in 2006 was 100, what is the price of a 1979 cheeseburger in 2006 dollars? a. $0.99 b. $43.00 c. $1.19 d. $0.02 e. $0.15 Answer: c. Section: 8.1 9. In 2004, the movie Spiderman 2 generated about $40 million on its opening day. In 1992, Batman Returns generated $35 million on its opening day. If the CPI in 2006 is 100; in 2004, it is 93.7; and in 1992, 69.5, __________ is the larger single-day grossing movie, with __________ in revenues in 2006 dollars. a. Spiderman 2 ; $57.5 b. Batman Returns ; $47.1 c. Batman Returns ; $50.3 d. Spiderman 2 ; $40.0 e. Not enough information is given. Answer: c. Section: 8.1 10. Today, the Wendy’s cheeseburger is on the 99-cent menu. If the CPI in 1979 was 36 and the CPI in 2006 was 100, what is the price of a 2006 cheeseburger in 1979 dollars? a. $35 b. $2.75 c. $0.03 d. $0.36 e. None of the above. Answer: d. Section: 8.1 11. Often, when discussing inflation, we use the “core rate of inflation,” which excludes __________ from its calculation. a. energy prices b. food and energy prices c. housing prices d. food and housing prices e. energy and housing prices Answer: b. Section: 8.1 12. In the United States, money is backed by a. oil. b. gold. c. silver. d. nothing. e. None of the above. Answer: d. Section: 8.2 13. Money that has no value except as money is called __________ money.
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Chapter 8--MacroTB - CHAPTER 8 Inflation MULTIPLE-CHOICE 1...

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