chp 6,7,8 study

Chp 6,7,8 study - Exam Name MULTIPLE CHOICE Choose the one alternative that best completes the statement or answers the question 1 The consumer

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Exam Name___________________________________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) The consumer price index (CPI) 1) _______ A) compares the cost in the current period to the cost in a reference base period of a basket of goods typically consumed in the base period. B) compares the cost of the typical basket of goods consumed in period 1 to the cost of a basket of goods typically consumed in period 2. C) is the ratio of the average price of a typical basket of goods to the cost of producing those goods. D) measures the increase in the prices of the goods included in GDP. Year Price index Inflation rate (percent) 1 100 2 117 A 3 125 B 4 120 C 5 D 8.3 6 150 E 2) In the table above, what inflation rate belongs in space A? 2) _______ A) 6.8 percent B) 17.0 percent C) - 4.0 percent D) 8.3 percent 3) In the table above, what inflation rate belongs in space C? 3) _______ A) - 4.0 percent B) 6.8 percent C) 17.0 percent D) 8.3 percent 4) When the GDP deflator increases from 120 to 126 in one year, ________. 4) _______ A) money is losing its value B) in the following year the GDP deflator will be 132 C) you can purchase more with each dollar D) you would anticipate a one - time rise in the price level 5) Price indexes can overstate inflation because they 5) _______ A) do not contain the prices of any used goods. B) do not contain the prices of services. C) do not contain the prices of foreign goods. D) omit some quality improvements. 6) Substitution bias in the CPI refers to the fact that the CPI 6) _______ A) takes into account the substitution of goods by consumers when relative prices change. B)
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This note was uploaded on 04/12/2011 for the course ECON 1101 taught by Professor Rappoport during the Spring '08 term at Temple.

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Chp 6,7,8 study - Exam Name MULTIPLE CHOICE Choose the one alternative that best completes the statement or answers the question 1 The consumer

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