The consumer price index is a cost of living index a

This preview shows page 34 - 37 out of 52 pages.

We have textbook solutions for you!
The document you are viewing contains questions related to this textbook.
Economics: Private and Public Choice
The document you are viewing contains questions related to this textbook.
Chapter 15 / Exercise 5
Economics: Private and Public Choice
Gwartney/Stroup/Sobel/Macpherson
Expert Verified
190.The consumer price index is a cost-of-living index.A)TrueB)False
191.A cost-of-living index measures the amount of expenditures needed to maintain a certain standard of living, while a cost-of-goods index measures the amount of expenditures needed to purchase a given basket of goods.
192.The Bureau of Labor Standards collects a random sample of different goods and services every month in order to achieve statistical uniformity.
193.A consumer price index of 107 means that prices rose by 7% from the previous year.
194.A consumer price index of 115 means that prices rose by 15% from the base year.A)TrueB)False
195.Technological innovations in consumer products make it difficult to compare market baskets over time.Page 34
We have textbook solutions for you!
The document you are viewing contains questions related to this textbook.
Economics: Private and Public Choice
The document you are viewing contains questions related to this textbook.
Chapter 15 / Exercise 5
Economics: Private and Public Choice
Gwartney/Stroup/Sobel/Macpherson
Expert Verified
196.Core inflation is more stable than headline inflation because the two most volatile components are not included in core inflation.
197.The consumer price index measures the average change in prices paid by urban consumers and urban wage earners for a market basket of goods and services, covering roughly 87% of the population.
198.The consumer price index measures both private goods and services and public goods and services.A)TrueB)False
199.The general formula for an escalator clause adjustment is: new = original × (original yearindex / current year index).
200.A consumer price index change from 130 to 135 reflects a 3.85% inflation rate.
201.The formula for price change is: [(CPI in Current Year / CPI in Original Year) × 100] – 100 = Percent Change in Price.
202.Escalator clauses are important in times of rising inflation because they protect the real value of wages.A)TrueB)False
Page 35
203.To convert a nominal change to a real change in dollar terms, the base year index must beset at 100.
204.If GDP grows 8% in one year and inflation, measured by the GDP deflator, grows by 6% over the same time period, then the real GDP has increased.
205.If nominal GDP is $12.5 trillion for a given year and the GDP deflator for that year is 111, then real GDP is approximately $11.261 trillion.
206.Use of the GDP deflator allows economists to estimate the real rate of growth of the economy.A)TrueB)False
207.The goal of deflating a GDP series is to see how real output has changed.

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture