26Abel/Bernanke • Macroeconomics, Fifth Edition52.The consumer price index (CPI) was 180 for 2002 when using 1983 as the base year (1983 =100).Now suppose we switch and use 2002 as the base year (2002 =100). What is the CPI for 1983 withthe new base year?
Level of difficulty: 3Section: 2.453.The Boskin Commission concluded that the CPI overstates increases in the cost of living by___________ percentage point(s) per year.(a) Less than 1(b) 1 to 2(c) About 3(d) Over 4Answer: B
Level of difficulty: 2Section: 2.454.The CPI may overstate inflation for all the following reasons EXCEPT
Level of difficulty: 1Section: 2.455.The nominal interest rate minus the inflation rate is the
Level of difficulty: 1Section: 2.556.By Marks buys a one-year German government bond (called a bund) for $400. He receives principaland interest totaling $436 one year later. During the year the CPI rose from 150 to 162. The nominalinterest rate on the bond was ___________, and the real interest rate was ___________.
Level of difficulty: 2Section: 2.5