False 125 125 pts Question 5 Which of the following statements is true Demand

False 125 125 pts question 5 which of the following

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False
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1.25 / 1.25 pts Question 5 Which of the following statements is true ? Demand-pull inflation is caused by excess total spending. Cost-push inflation is caused by an increase in resource costs. If nominal interest rates remain the same and the inflation rate falls, real interest rates increase. If real interest rates are negative, lenders incur losses. All of these. Correct! Correct! 1.25 / 1.25 pts Question 6 Exhibit 7-1 Consumer Price Index Year Consumer Price Index 1 100 2 110 3 115 4 120 5 125 As shown in Exhibit 7-1, the rate of inflation for Year 2 is: 5 percent. 10 percent. Correct! Correct! 20 percent. 25 percent.
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0 / 1.25 pts Question 7 Suppose hypothetically that the consumer price index (CPI) was 150 in Year 1 and was 180 in Year 2.What would be the inflation rate for this period?
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1960. 1970. 1980. Correct! Correct! 1990. 2007. Not yet graded / 1.25 pts Question 12 Your Answer: What are some criticisms of the CPI as a measure of inflation? -It can overstate or understate the impact of inflation for certain groups -Does not measure quality
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-Substitutes are ignored 1.25 / 1.25 pts Question 13 Suppose that the consumer price index (CPI) was 160 in Year X and 166 in Year Y, inflation during Year Y was approximately: zero; prices were stable. 3.8 percent. Correct! Correct! 6 percent. 66 percent. 1.25 / 1.25 pts Question 14 Deflation: was prevalent during the oil shocks of the 1970s. will cause consumers' purchasing power to shrink. has been persistent in the U.S. economy since the Great Depression. none of these. Correct! Correct! 1.25 / 1.25 pts Question 15 Inflation refers only to rising prices at a given time period. True False Correct! Correct!
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1.25 / 1.25 pts Question 16 Which one of the following groups benefits from inflation? Borrowers. Correct! Correct! Savers. Landlords. Lenders. 1.25 / 1.25 pts Question 17 A reduction in the rate of inflation is called: deflation. disinflation. Correct! hyperinflation. cost-push inflation. 1.25 / 1.25 pts Question 18 Assume that the real rate of interest is 5 percent and a lender charges a nominal interest rate of 15 percent. If a borrower expects that the rate of inflation next year will be 10 percent and the actual rate of inflation next year is 12 percent: neither the borrower nor the lender benefits from inflation. both the borrower and the lender lose from inflation.
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the borrower benefits from inflation, while the lender loses from inflation. Correct! Correct! the lender benefits from inflation, while the borrower loses from inflation. 1.25 / 1.25 pts Question 19 As the price of gasoline rose during the 1970s, consumers cut back on their use of gasoline relative to other consumer goods. This situation contributed to which bias in the consumer price index? Substitution bias. Correct! Correct! Transportation bias. Quality bias. Indexing bias. 1.25 / 1.25 pts Question 20 Real income in Year X is equal to: Correct! Correct! Year X nominal income ´ CPI. 1.25 / 1.25 pts Question 21
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Exhibit 7-2 Consumer Price Index Year Consumer Price Index 1 80 2 100 3 105 4 125 5 150 As shown in Exhibit 7-2, the rate of inflation for Year 5 is: 5 percent 10 percent. 20 percent. Correct! 25 percent. 1.25 / 1.25 pts Question 22 A measure comparing the prices of consumer goods and services that a household typically purchases to the prices of those goods and services purchased in a base year is: the GDP deflator. the consumer price index. Correct! Correct! the price level. inflation. the base measure. 1.25 / 1.25 pts Question 23 During periods of inflation, all prices of all products are rising.
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True False Correct! 1.25 / 1.25 pts Question 24 Suppose the price of banana rises over time and consumers respond by buying fewer bananas. This situation contributes to which bias in the consumer price index? Substitution bias. Correct! Correct! Transportation bias. Quality bias. Indexing bias. 1.25 / 1.25 pts Question 25 The consumer price index (CPI): adjusts for changes in product quality. includes separate market baskets of goods and services for both base and current years. includes only goods and services bought by typical urban consumer. Correct! Correct! uses current year quantities of goods and services. 1.25 / 1.25 pts Question 26 Disinflation means a decrease in:
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the rate of inflation. Correct! Correct! the general level of prices in the economy. the prices of all products in the economy. the circular flow. 1.25 / 1.25 pts Question 27 Inflation psychosis and wage-price spirals are two types of hyperinflation. True Correct! Correct! False 1.25 / 1.25 pts Question 28 Unlike the GDP deflator, the CPI does not consider goods and services purchased by business and government. True Correct! False 1.25 / 1.25 pts Question 29 If the consumer price index (CPI) in Year 1 was 200 and the CPI in Year 2 was 215, the rate of inflation was: 215 percent. 15 percent.
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5 percent. 7.5 percent. Correct! 8 percent. 1.25 / 1.25 pts Question 30 Inflation is measured by an increase in: homes, autos and basic resources. prices of all products in the economy. the consumer price index (CPI). Correct! Correct! none of these. 0 / 1.25 pts Question 31 An increase in the general price level is termed: the Consumer Price Index. You Answered inflation. Correct Answer Correct Answer deflation. stagflation. nominal pricing. 1.25 / 1.25 pts Question 32
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Consider an economy with only two goods: bread and wine. In 1982, the typical family bought 4 loaves of bread at 50¢ per loaf and 2 bottles of wine for $9 per bottle. In Year X, bread cost 75¢ per loaf and wine cost $10 per bottle. The CPI for Year X (using a 1982 base year) is: 100. 115. Correct! Correct! 126. 130. 1.25 / 1.25 pts Question 33 Real income is the purchasing power of nominal (money) income. True Correct! Correct! False 1.25 / 1.25 pts Question 34 Demand-pull inflation occurs: at or close to full employment. because of excess total spending. when "too much money is chasing too few goods." all of these. Correct! 1.25 / 1.25 pts Question 35
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Suppose a market basket of goods and services costs $1,000 in the base year and the consumer price index (CPI) is currently 110. This indicates the price of the market basket of goods and services is now: $110. $1,000. $1,100. Correct! Correct! $1,225. 1.25 / 1.25 pts Question 36 According to the Bureau of Labor Statistics' survey, which category represents the largest expense for the typical urban family? Housing. Correct! Food and beverages. Transportation. Medical care. 1.25 / 1.25 pts Question 37 Exhibit 7-2 Consumer Price Index Year Consumer Price Index 1 80 2 100 3 105 4 125 5 150 As shown in Exhibit 7-2, the rate of inflation for Year 4 is:
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5 percent. 10 percent. 19 percent. Correct! Correct! 20 percent. 25 percent. 1.25 / 1.25 pts Question 38 Demand-pull inflation is most pronounced during a recession (as opposed to the recovery phase of the business cycle). True False Correct! 1.25 / 1.25 pts Question 39 Suppose that last year you borrowed $100 at 5 percent interest to purchase a $100 pair of Nike cross- training shoes. This year you repaid the bank with interest. If the inflation rate was 10 percent last year, your purchase of the shoes would: make you an inflation winner as you saved $5 on the shoes. Correct! Correct! make you an inflation loser as you paid $5 more than you should have for the shoes. not be a ff ected at all by the inflation rate. be taxed according to COLA adjustments. make you an inflation loser because of bracket creep.
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1.25 / 1.25 pts Question 40 Suppose the consumer price index (CPI) stands at 250 this year. If the inflation rate is 10 percent, then next year's CPI will equal: 250. 260. 275. Correct! Correct! 500. Quiz Score: 46.25 out of 50
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  • Spring '12
  • kumar
  • Inflation, Consumer price index

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