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Exam 7: The Cpi and the Cost of Living

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Question 41

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$\begin{array} { | l | c | c | c | c | } \hline \text { Item } & \begin{array} { c } \text { Quantity } \\( 2011 ) \end{array} & \text { Price (2011) } & \begin{array} { c } \text { Quantity } \\\text { (2012) }\end{array} & \text { Price (2012) } \\\hline \text { Magazines } & 400 & \$ 5.00 & 450 & \$ 4.50 \\\hline \text { Movie tickets } & 50 & \$ 6.00 & 200 & \$ 8.00 \\\hline \text { Pizzas } & 100 & \$ 10.00 & 120 & \$ 10.50 \\\hline\end{array}$ The data in the table above shows the consumption by families in an economy. The year 2011 is the reference base period. - Based on the table above, the cost of the base period market basket in the base period is

A) $3,250.
B) $4,885.
C) $21.00.
D) $4,650.
E) $3,300.

F) C) and D)
G) None of the above

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Question 42

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$\begin{array} { l c c c c } \hline \text { Item } & \begin{array} { c } \text { Quantity } \\\mathbf { ( 2 0 1 1 ) }\end{array} & \begin{array} { c } \text { Price } \\\mathbf { ( 2 0 1 1 ) }\end{array} & \begin{array} { c } \text { Quantity } \\\mathbf { ( 2 0 1 2 ) }\end{array} & \begin{array} { c } \text { Price } \\\mathbf { ( 2 0 1 2 ) }\end{array} \\\hline \text { Pens } & 400 & \$ 1.00 & 400 & \$ 1.02 \\\text { CDs } & 200 & \$ 15.00 & 200 & \$ 15.90 \\\hline\end{array}$ Consumers in a country buy only two goods, pens and CDs. The prices and quantities purchased by urban households are in the table above. -If 2011 is the reference base year, the cost of the CPI market basket in the base year is

A) $3,508.
B) $3,500.
C) $3,408.
D) $3,400.
E) $3,580.

F) A) and E)
G) A) and D)

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Question 43

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Suppose a report from the Bureau of Labor Statistics states that the CPI for the year 2012 was 152. What is the percentage point increase in the prices of the goods and services since the reference Base period?

Nominal and real wage rates

In the current year, the CPI is 122 and during the previous year the CPI was 115. The inflation rate between these years is

The fact the consumers substitute one good for another when prices change is

The reference base period that the BLS uses to measure the CPI is

If prices have increased since the base period, then

In order to determine if the quantity of goods and services that an hour's work can buy has Increased or decreased between 2000 and 2012, one should compare the

A ham and cheese sandwich at the local deli costs $4.99 in 2005. If the CPI in 2005 was 90.0 and the CPI today is 121.0, the equivalent price for the ham and cheese sandwich today is

Suppose the Bureau of Labor Statistics uses Ballpark Franks as the hot dogs used when calculating the consumer price index. During 2012, Oscar Mayer aggressively reduces prices. Consumers respond by purchasing more Oscar Mayer and less Ballpark Franks. The 2012 CPI is likely to

If your nominal income is $80,000 and your real income in base year prices is $71,500, what is the CPI?

Economists agree that the CPI

If prices have decreased since the base period, then

The trends displayed in the table can best be explained by

In 1970, the CPI was 39 and in 2000 it was 172. A local phone call cost $0.10 in 1970. What is the Price of this phone call in 2000 dollars?

The reference base period for the CPI has an index number of

If the CPI is 170 at the beginning of the year and 181 at the end, and a bank is paying a nominal interest rate of 6 percent, we see that

To measure the CPI, the BLS economic assistants check the prices of

Consumers in Beachland consume only two goods, sodas and DVDs. If they spend $10 on sodas And $90 on DVDs a month, how many sodas and DVDs are in their CPI market basket if the price of A soda is $1 and the price of a DVD is $9?