Question 1

Social Security payments are indexed, meaning the:

Accepted Answer

A)   nominal value is adjusted to maintain a constant real value.
B)   real value is adjusted to maintain a constant nominal value.
C)   payments are adjusted so retirees can buy more with their payments over time.
D)   payments are tied to stock market fluctuations.E) A) and B)
F) C) and D)

Question 2

When consumers substitute one good for another, this substitution:

Accepted Answer

A)   is captured by the CPI only if it occurs because of price changes.
B)   is captured by the CPI only if it occurs because of changes in consumers' tastes and preferences.
C)   is always captured by the CPI.
D)   is never captured by the CPI.E) B) and D)
F) A) and D)

Question 3

In 1976, the cost of a ticket to see a movie in the theater was $4. In 2019, a movie ticket cost $9. If the CPI is 56 for 1979 and 228 for 2019, to find the real 2019 value of a 1976 movie ticket we would multiply its nominal value in 1976 by which ratio?

Accepted Answer

A)   56/228
B)   228/56
C)   9/5
D)   5/9E) A) and B)
F) A) and C)

Question 4

Core inflation is an important statistic because:

Accepted Answer

A)   food and energy costs fluctuate frequently and can distort actual changes in the cost of living.
B)   the prices of retail consumption items fluctuate frequently and can distort actual changes in the cost of living.
C)   it is measured more regularly than headline inflation.
D)   the prices of durable goods fluctuate more frequently than the prices of nondurable goods and can distort actual changes in the cost of living.E) A) and B)
F) A) and C)

Question 5

Assume a market basket includes three avocados, two loaves of bread, a dozen eggs, and a seasoning packet.  According to the table shown, what is the change in the price level between the base year and the current year?

Accepted Answer

A)   7.4 percent
B)   4.9 percent
C)   7.7 percent
D)   6.4 percentE) A) and B)
F) B) and C)

Question 6

As new goods and services become available, the basket of goods used to calculate the CPI:

Accepted Answer

A)   immediately changes to reflect the new goods and services.
B)   will change once 75 percent of urban consumers use the new goods and services.
C)   does not change to reflect the new goods and services, in order to remain stable.
D)   is periodically updated in order to reflect the new goods and services.E) B) and D)
F) C) and D)

Question 7

The table shown displays CPI data for 2015 to 2019.  What was the rate of inflation from 2018 to 2019?

Accepted Answer

A)   12.5 percent
B)   11.1 percent
C)   13 percent
D)   17 percentE) A) and C)
F) A) and B)

Question 8

In 1976, the cost of a ticket to see a movie in the theater was $4. In 2019, a movie ticket cost $9. If the CPI is 56 for 1976 and 228 for 2019, then we could say the cost of a 1976 movie ticket in 2019 is _______, which indicates that the price of movie tickets _______.

Accepted Answer

A)   $16.29; has not increased as much as general inflation
B)   $16.29; is relatively higher in 2019 than it was in 1976
C)   $2.21; has not increased as much as general inflation
D)   $2.21; is relatively higher in 2019 than it was in 1976E) B) and C)
F) None of the above

Question 9

Social Security payments were _______ adjusted for inflation, causing the real value to retirees to _______ over time.

Accepted Answer

A)   not originally; increase
B)   not originally; decrease
C)   initially; increase
D)   initially; decreaseE) B) and C)
F) None of the above

Question 10

The table shown displays yearly salaries and the CPI across five decades.  How can we compare the real value of the 1979 salary to the salary earned in 2019?

Accepted Answer

A)   The 1979 salary must be subtracted from the 2019 salary as shown in the table.
B)   The 2019 salary must be put into real 2019 terms to compare it to the 1979 salary.
C)   Both salaries must be put into real dollars in the same year for comparison.
D)   There is no real way to compare the two salaries without more information.E) C) and D)
F) B) and D)

Question 11

Which of the following situations is an example of substitution?

Accepted Answer

A)   At the same price, consumers spend more money on watermelons in the summer and substitute apples in the fall.
B)   Consumers buy more T-bone steaks when the price of filet mignon increases.
C)   A grocery store chain decides to take a weak-selling good off the shelves.
D)   Consumers unsubscribe from HBO's streaming service after "Game of Thrones" ends.E) C) and D)
F) A) and B)

Question 12

Which of the following can explain why purchasing power parity doesn't hold exactly in reality?

Accepted Answer

A)   Transaction costs
B)   Political pressures
C)   Fixed prices
D)   Differences in consumption preferencesE) None of the above
F) B) and C)

Question 13

According to a central theory in macroeconomics:

Accepted Answer

A)   GDP will always increase over time.
B)   the change in prices as measured by the CPI always matches the change in the price level as measured by the PPI.
C)   wages naturally change to offset changes in the price level.
D)   changes in the economy can always be predicted with models.E) A) and B)
F) A) and C)

Question 14

PPP is the acronym for:

Accepted Answer

A)   producer purchasing power.
B)   purchasing power parity.
C)   producer power parity.
D)   purchasing price power.E) A) and B)
F) C) and D)

Question 15

Social Security payments are indexed using the:

Accepted Answer

A)   CPI.
B)   PPI.
C)   GDP deflator.
D)   RPI.E) A) and C)
F) B) and C)

Exam 8: Thecost of Living

In 1976, the cost of a ticket to see a movie in the theater was $4. In 2019, a movie ticket cost $9. If the CPI is 56 for 1976 and 228 for 2019, then we could say the cost of a 1976 movie ticket in 2019 is _, which indicates that the price of movie tickets _.

Correct Answer
verified

Assume a market basket includes three avocados, two loaves of bread, a dozen eggs, and a seasoning packet. According to the table shown, what is the change in the price level between the base year and the current year?

Correct Answer
verified

Which of the following can explain why purchasing power parity doesn't hold exactly in reality?

Correct Answer
verified

When consumers substitute one good for another, this substitution:

Correct Answer
verified

Which of the following situations is an example of substitution?

Correct Answer
verified

Social Security payments were _ adjusted for inflation, causing the real value to retirees to _ over time.

Correct Answer
verified

The table shown displays yearly salaries and the CPI across five decades. How can we compare the real value of the 1979 salary to the salary earned in 2019?

Correct Answer
verified

Social Security payments are indexed using the:

Correct Answer
verified

In 1976, the cost of a ticket to see a movie in the theater was $4. In 2019, a movie ticket cost $9. If the CPI is 56 for 1979 and 228 for 2019, to find the real 2019 value of a 1976 movie ticket we would multiply its nominal value in1976 by which ratio?

Correct Answer
verified

PPP is the acronym for:

Correct Answer
verified

The table shown displays CPI data for 2015 to 2019. What was the rate of inflation from 2018 to 2019?

Correct Answer
verified

According to a central theory in macroeconomics:

Correct Answer
verified

Social Security payments are indexed, meaning the:

Correct Answer
verified

As new goods and services become available, the basket of goods used to calculate the CPI:

Correct Answer
verified

Core inflation is an important statistic because:

Correct Answer
verified

Exam 8: Thecost of Living

In 1976, the cost of a ticket to see a movie in the theater was $4. In 2019, a movie ticket cost $9. If the CPI is 56 for 1976 and 228 for 2019, then we could say the cost of a 1976 movie ticket in 2019 is _______, which indicates that the price of movie tickets _______.

Correct AnswerverifiedShow Answer

Assume a market basket includes three avocados, two loaves of bread, a dozen eggs, and a seasoning packet. According to the table shown, what is the change in the price level between the base year and the current year?

Correct AnswerverifiedShow Answer

Which of the following can explain why purchasing power parity doesn't hold exactly in reality?

Correct AnswerverifiedShow Answer

When consumers substitute one good for another, this substitution:

Correct AnswerverifiedShow Answer

Which of the following situations is an example of substitution?

Correct AnswerverifiedShow Answer

Social Security payments were _______ adjusted for inflation, causing the real value to retirees to _______ over time.

Correct AnswerverifiedShow Answer

The table shown displays yearly salaries and the CPI across five decades. How can we compare the real value of the 1979 salary to the salary earned in 2019?

Correct AnswerverifiedShow Answer

Social Security payments are indexed using the:

Correct AnswerverifiedShow Answer

In 1976, the cost of a ticket to see a movie in the theater was $4. In 2019, a movie ticket cost $9. If the CPI is 56 for 1979 and 228 for 2019, to find the real 2019 value of a 1976 movie ticket we would multiply its nominal value in 1976 by which ratio?

Correct AnswerverifiedShow Answer

PPP is the acronym for:

Correct AnswerverifiedShow Answer

The table shown displays CPI data for 2015 to 2019. What was the rate of inflation from 2018 to 2019?

Correct AnswerverifiedShow Answer

According to a central theory in macroeconomics:

Correct AnswerverifiedShow Answer

Social Security payments are indexed, meaning the:

Correct AnswerverifiedShow Answer

As new goods and services become available, the basket of goods used to calculate the CPI:

Correct AnswerverifiedShow Answer

Core inflation is an important statistic because:

Correct AnswerverifiedShow Answer

In 1976, the cost of a ticket to see a movie in the theater was $4. In 2019, a movie ticket cost $9. If the CPI is 56 for 1976 and 228 for 2019, then we could say the cost of a 1976 movie ticket in 2019 is _, which indicates that the price of movie tickets _.

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Social Security payments were _ adjusted for inflation, causing the real value to retirees to _ over time.

Correct Answer
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Correct Answer
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Correct Answer
verified

In 1976, the cost of a ticket to see a movie in the theater was $4. In 2019, a movie ticket cost $9. If the CPI is 56 for 1979 and 228 for 2019, to find the real 2019 value of a 1976 movie ticket we would multiply its nominal value in1976 by which ratio?

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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