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Changes in the consumer price index are useful in predicting changes in the producer price index.

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Many economists believe the bias in the CPI is now only about half as large as it once was.

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Henry Ford paid his workers $5 a day in 1914,when the CPI was 10.Today,with the price index at 177,the $5 a day is worth $88.50.

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When the price of Italian wine rises,this change is reflected in the U.S.CPI but not in the U.S.GDP deflator.

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Kristine has a savings account at a bank.If the nominal interest rate she earns exceeds the rate of inflation,then her purchasing power increases over time.

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Archie has a savings account at a bank.If he earns 6 percent interest on his account and if there is deflation,then his purchasing power rises by more than 6 percent over the course of a year.

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The CPI does not reflect the increase in the value of the dollar that arises from the introduction of new goods.

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True

Consumer price index = Consumer price index = × 100. × 100.

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If the nominal interest rate is 5 percent and the inflation rate is 2 percent,then the real interest rate is 7 percent.

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The Bureau of Labor Statistics determines which prices are most important to the typical consumer by surveying consumers.

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In the U.S. ,when the price of oil rises,the CPI rises by much more than does the GDP deflator.

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The Bureau of Labor Statistics is part of the U.S.Department of Labor.

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Persistent increases in the overall level of prices have been the norm.

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The PPI is a price index that measures the cost to consumers of a typical basket of goods sold by firms.

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The U.S.economy has never experienced deflation.

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If the current year CPI is 90,then the price level has decreased 10 percent since the base year.

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True

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.

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The real interest rate is the interest rate corrected for inflation.

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True

If the consumer price index is 120 in 2009 and 139.2 in 2010,then the rate of inflation for 2010 is 39.2 percent.

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The GDP deflator reflects the prices of all goods and services produced around the world,whereas the consumer price index reflects the prices of all goods and services bought by consumers.

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