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+Chapter 13 Quiz - Inflation Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. The best

economics quiz - we have to put info as to why we answered each answer the way we did. nothing major just a support sentence or two. - due by 9pm this evening.

+Chapter 13 Quiz - Inflation Multiple Choice Identify the choice that best completes the statement or answers the question. ____ 1. The best definition of inflation is a (an): a. temporary increase in prices. b. increase in the price of one important commodity such as food. c. persistent increase in the general level of prices as measured by a price index. d. increase in the purchasing power of the dollar. ____ 2. Which of the following is true of inflation? a. It is an increase in the general price level of goods and services. b. The purchasing power of money decreases as the result of inflation. c. Inflation is measured by an increase in the Consumer Price Index. d. While inflation is good for borrowers, it is especially hurtful to those on fixed incomes. e. All of the above are true. ____ 3. Suppose the consumer price index (CPI) for Year X is 130. This means the average price of goods and ser- vices is: a. currently $130. b. 130 percent more in Year X than in the base year. c. 130 percent more in the base year than in Year X. d. priced at 30 percent more in Year X than in the base year. ____ 4. The base year in the consumer price index (CPI) is: a. given a value of zero. b. a year chosen as a reference for prices in all other years. c. always the first year in the current decade. d. established by law. ____ 5. 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: a. 100. b. 115. c. 126.
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d. 130. ____ 6. Suppose we shopped for a basket of goods in Year 1 and it cost $350. Suppose the same basket of goods adds up to $385 in Year 2. If we use Year 1 as a base year, what would be the Year 2 CPI? a. 35. b. 90. c. 100. d. 110. e. 135. ____ 7. Suppose a market basket of goods and services costs $400 in the base year and $500 this year. The consumer price index (CPI) for this year is: a. 25. b. 100. c. 125. d. 500. ____ 8. 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? a. 12 percent. b. 16.7 percent. c. 20 percent. d. 30 percent. ____ 9. If the consumer price index in Year 1 was 200 and the CPI for Year 2 was 230, the rate of inflation was: a. 15 percent. b. 7.5 percent. c. 30 percent. d. 230 percent. ____ 10. The real interest rate can be expressed as the: a. nominal interest rate minus the real interest rate.
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+Chapter 13 Quiz - Inflation
Multiple Choice
Identify the choice that best completes the statement or answers the question.
____ 1. The best definition of inflation is a (an):
a. temporary increase...

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