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Unformatted text preview: flation rate. D. there will be no relation between the CPI and the actual inflation rate. 33. In the Purdue price index, the bundle includes 3 notebooks, 4 textbooks, and 12 cups of coffee. In 2001 the price of a notebook is $2, the price of a textbook is $89 and a cup of coffee is $4. Prices in 2002 are $3 for a notebook, $128 for a textbook and $4 for a cup of coffee. Prices in 2003 are $5 for a notebook, $113 for a textbook and $6 for a cup of coffee. What is the price index in 2003 if the base year is 2001? A. 138.8 B. 100 C. 131.5 *** D. 72.1 E. [None of the above] 34. The demand for loanable funds comes from _______ , and the supply comes from _______ . A. investment; savings *** B. savings; investment C. consumption; savings D. savings; consumption [Use the following information to answer questions 35–36.] Assume a closed economy. Investment (I) $1,500 Taxes (T) $900 Consumption (C) $3,000 Gov’t Purchases (G) GDP (Y) $6,400 35. Private saving is _______ . A. $1,900 B. $3,400 C. $2,500 *** D. $1,000 E. [None of the above] 36. National saving is _______ . A. $3,000 B. $3,400 C. $1,000 D. $2,200 E. [None of the above] *** 37. The determinants of productivity DO NOT include A. Physical capital B. Human capital C. The money supply *** D. Natural resources E. Technological knowledge. 38. In the market for loanable funds, a new investment tax credit will _______ the interest rate and _______ the level of investment. A. increase; increase *** B. decrease; increase C. increase; decrease D. decrease; decrease 39. Kuaristan and Latkovia are very similar countries that differ only in their capital stocks – Kuaristan has many more factories than Latkovia. Both countries are planning on building three additional factories in the coming year. We would expect that A. Human capital per worker grow faster in Latkovia. B. Human capital per worker will grow faster in Kuaristan. C. GDP per capita will increase for both, but the increase will be larger for Kuaristan. D. GDP per capita...
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