Ch241In The Calculation Of The CPI
Ch.24
1 In the calculation of the CPI, sweaters are given greater weight than jeans if
a.
the price of sweaters is higher than the price of jeans.
b.
it costs more to produce sweaters than it costs to produce jeans.
c.
sweaters are more readily available than jeans are to the typical consumer.
d.
consumers buy more sweaters than jeans.
ANS: D
2 In computing the consumer price index, a base year is chosen. Which of the following statements about the base year is correct?
a.
The base year is always the first year among the years for which computations are being made.
b.
It is necessary to designate a base year only in the simplest case of two goods; in more realistic cases, it is not necessary to designate a base year.
c.
The value of the consumer price index is always 100 in the base year.
d.
The base year is always the year in which the cost of the basket was highest among the years for which computations are being made.
ANS: C
3. If 2002 is the base year, then the inflation rate in 2005 equals
a.
b.
c.
d.
ANS: D
4 Suppose a basket of goods and services has been selected to calculate the CPI and 2002 has been selected as the base year. In 2002, the basket’s cost was $50; in 2004, the basket’s cost was$52; and in 2006, the basket’s cost was $54.60. The value of the CPI in 2006 was
a.
91.6.
b.
104.6.
c.
109.2.
d.
154.6.
ANS: C
5 If the price index was 90 in year 1, 100 in year 2, and 95 in year 3, then the economy experienced
a.
10 percent inflation between years 1 and 2 ,and 5 percent inflation between years 2 and 3.
b.
10 percent inflation between years 1 and 2, and 5 percent deflation between years 2 and 3.
c.
11.1 percent inflation between years 1 and 2, and 5 percent inflation between years 2 and 3.
d.
11.1 percent inflation between years 1 and 2, and 5 percent deflation between years 2 and 3.
ANS: D
6. Which of the following changes in the price index produces the greatest rate of inflation: 80 to 100, 100 to 120, or 150 to 170?
a.
80 to 100
b.
100 to
1 In the calculation of the CPI, sweaters are given greater weight than jeans if
a.
the price of sweaters is higher than the price of jeans.
b.
it costs more to produce sweaters than it costs to produce jeans.
c.
sweaters are more readily available than jeans are to the typical consumer.
d.
consumers buy more sweaters than jeans.
ANS: D
2 In computing the consumer price index, a base year is chosen. Which of the following statements about the base year is correct?
a.
The base year is always the first year among the years for which computations are being made.
b.
It is necessary to designate a base year only in the simplest case of two goods; in more realistic cases, it is not necessary to designate a base year.
c.
The value of the consumer price index is always 100 in the base year.
d.
The base year is always the year in which the cost of the basket was highest among the years for which computations are being made.
ANS: C
3. If 2002 is the base year, then the inflation rate in 2005 equals
a.
b.
c.
d.
ANS: D
4 Suppose a basket of goods and services has been selected to calculate the CPI and 2002 has been selected as the base year. In 2002, the basket’s cost was $50; in 2004, the basket’s cost was$52; and in 2006, the basket’s cost was $54.60. The value of the CPI in 2006 was
a.
91.6.
b.
104.6.
c.
109.2.
d.
154.6.
ANS: C
5 If the price index was 90 in year 1, 100 in year 2, and 95 in year 3, then the economy experienced
a.
10 percent inflation between years 1 and 2 ,and 5 percent inflation between years 2 and 3.
b.
10 percent inflation between years 1 and 2, and 5 percent deflation between years 2 and 3.
c.
11.1 percent inflation between years 1 and 2, and 5 percent inflation between years 2 and 3.
d.
11.1 percent inflation between years 1 and 2, and 5 percent deflation between years 2 and 3.
ANS: D
6. Which of the following changes in the price index produces the greatest rate of inflation: 80 to 100, 100 to 120, or 150 to 170?
a.
80 to 100
b.
100 to