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Exam 24: Measuring the Cost of Living

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Question 261

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If the consumer price index changes from 125 in September to 150 in October, what is the rate of inflation?

A) 45.5%
B) 20.0%
C) 16.7%
D) 9.1%

E) A) and B)
F) A) and C)

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Question 262

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Table 24-10 The table below shows the prices of baseballs and baseball bats for three years. Assume the typical consumer's basket consists of 6 baseballs and 2 baseball bats. -Refer to Table 24-10. If 2008 is the base year, then the consumer price index was

A) 100.00 in 2008, 110.03 in 2009, and 117.43 in 2010.
B) 100.00 in 2008, 110.03 in 2009, and 129.20 in 2010.
C) 100.00 in 2008, 117.00 in 2009, and 132.50 in 2010.
D) 169.50 in 2008, 186.50 in 2009, and 219.00 in 2010.

E) None of the above
F) B) and D)

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Question 263

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In 1983, one could buy a model radio-controlled airplane for $11.50 each. Those same planes are available today and the price increased at exactly the rate of inflation. If the CPI today is 220.5 and in 1983 was 105, what is the price of the airplane today?

The producer price index measures the cost of a basket of goods and services bought by firms rather than consumers.

When computing the cost of the basket of goods and services purchased by a typical consumer, which of the following changes from year to year?

When the overall level of prices in the economy is increasing, economists say that the economy is experiencing

Every unit of good x that is produced in the United States is exported to other countries. An increase in the price of good x shows up

Write the formula for computing the cost of a basket of goods in a given period assuming you only have two goods, X and Y, which are bought in quantities Qx and Qy, and sold at prices of Px and Py.

Bob deposits $100 in a bank account that pays an annual interest rate of 5 percent. A year later, Bob withdraws his $105. If deflation was 7 percent during the year the money was deposited, then Bob's purchasing power has increased by 12 percent.

Which of the following statements is true?

Scenario 24-4 Quinn has job offers in Wrexington and across the country in Charlieville. The Wrexington job would pay a salary of $50,000 per year, and the Charlieville job would pay a salary of $40,000 per year. The CPI in Wrexington is 150, and the CPI in Charlieville is 90. -Refer to Scenario 24-4. The Wrexington salary in Charlieville dollars is

Table 24-5 The table below pertains to Wrexington, an economy in which the typical consumer's basket consists of 20 pounds of meat and 10 toys. -Refer to Table 24-5. If the base year is 2004, then the CPI in 2004 was

Assume most athletic apparel bought by U.S. consumers is imported from other nations. If all else is constant, an increase in the price of foreign-made athletic apparel will cause the U.S.

During periods of deflation, the real interest rate will be lower than the nominal interest rate.​

Harry spent $39,000 in 2009 and $42,000 in 2014 on goods and services. The consumer price index was 220 for 2009 and 231 for 2014. Harry's 2014 spending in 2009 dollars is about

Scenario 24-3 Sue Holloway was an accountant in 1944 and earned $12,000 that year. Her son, Josh Holloway, is an accountant today and he earned $210,000 in 2013. The price index was 17.6 in 1944 and 218.4 in 2013. -Refer to Scenario 24-3. In real terms, Sue Holloway's income amounts to about what percentage of Josh Holloway's income?

A worker received $5 for a daily wage in 1930. What is the value of that wage today if the CPI was 17 in 1930 and is 230 today?

A decrease in the price of large tractors imported into the United States from Russia

Scenario 24-6 TOPICS: Price levels Inflation KEYWORDS: BLOOM'S: Application CUSTOM ID: 016.24 - SAE - MANK08 Table 24-14 The table below lists the per pound prices of meat and potatoes for the months of January, February, and March. Assume that the typical consumer buys 25 pounds of meat and 15 pounds of potatoes each month, and that January is the base period. -Refer to Table 24-14. Calculate the inflation rate for February.

Table 24-5 The table below pertains to Wrexington, an economy in which the typical consumer's basket consists of 20 pounds of meat and 10 toys. -Refer to Table 24-5. If the base year is 2006, then the inflation rate in 2005 was