STUDY GUIDE 2 ECON

STUDY GUIDE 2 ECON - Study Guide 2 EC2200/8 SAT 11 AM...

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Unformatted text preview: Study Guide 2 EC2200/8 SAT 11 AM Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. The term inflation is used to describe a situation in which a. the overall level of prices in the economy is increasing. b. incomes in the economy are increasing. c. stock-market prices are rising. d. the economy is growing rapidly. ____ 2. When the overall level of prices in the economy is increasing, economists say that the economy is experiencing a. economic growth. b. stagflation. c. inflation. d. deflation. ____ 3. Which of the following is correct? a. The GDP deflator is better than the CPI at reflecting the goods and services bought by consumers. b. The CPI is better than the GDP deflator at reflecting the goods and services bought by consumers. c. The GDP deflator and the CPI are equally good at reflecting the goods and services bought by consumers. d. The GDP deflator is more commonly used as a gauge of inflation than the CPI is. ____ 4. The CPI is a measure of the overall cost of the goods and services bought by a. a typical consumer, and the CPI is computed and reported by the Department of the Treasury. b. typical consumers and typical business firms, and the CPI is computed and reported by the Department of the Treasury. c. a typical consumer, and the CPI is computed and reported by the Bureau of Labor Statistics. d. typical consumers and typical business firms, and the CPI is computed and reported by the Bureau of Labor Statistics. ____ 5. Which entity within the U.S. government is responsible for computing and reporting the CPI? a. the Department of Commerce b. the Department of Labor c. the General Accounting Office d. the Council of Economic Advisers ____ 6. In computing the consumer price index, a base year is chosen. Which of the following statements about the base year is correct? a. The base year is always the first year among the years for which computations are being made. b. It is necessary to designate a base year only in the simplest case of two goods; in more realistic cases, it is not necessary to designate a base year. c. The value of the consumer price index is always 100 in the base year. d. The base year is always the year in which the cost of the basket was highest among the years for which computations are being made. ____ 7. If the consumer price index was 80 in 2004, 100 in 2005, and 110 in 2006, then the base year must be a. 2004. 1 b. 2005. c. 2006. d. The base year cannot be determined from the given information. ____ 8. From 2004 to 2005, the CPI for medical care increased from 260.8 to 272.8. What was the inflation rate for medical care? a. 4.4 percent b. 4.6 percent c. 12.0 percent d. 172.8 percent ____ 9. Which of the following changes in the price index produces the greatest rate of inflation: 80 to 100, 100 to 120, or 150 to 170?...
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This note was uploaded on 01/20/2012 for the course ECON 2200 taught by Professor Muratdoral during the Fall '09 term at Kennesaw.

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STUDY GUIDE 2 ECON - Study Guide 2 EC2200/8 SAT 11 AM...

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