4/4/24, 11:12 AM Test 2 - Chapter 24 Measuring the Cost of Living

Câu 1: The consumer price index is used to

A. Convert nominal GDP into real GDP

B. Turn dollar figures into meaningful measures of purchasing power
C. Characterize the types of goods and services that consumers purchase
D. Measure the quantity of goods and services that the economy produces

Câu 2: Economists use the term inflation to describe a situation in which

A. Some prices are rising faster than others

B. The economy's overall price level is rising
C. The economy's overall price level is high, but not necessarily rising
D. The economy's overall output of goods and services is rising faster than the
economy's overall price level.

Câu 3: The inflation rate is defined as the

A. Price level in an economy

B. Change in the price level from one period to the next
C. Percentage change in the price level from the previous period
D. Price level minus the price level from the previous period.

Câu 4: The inflation rate you are likely to hear on the nightly news is calculated from

A. The GDP deflator

B. The CPI
C. The VN-INDEX
D. The unemployment rate.

Câu 5: The CPI is more commonly used as a gauge of inflation than the GDP deflator is
because

A. The CPI is easier to measure

B. The CPI is calculated more often than the GDP deflator is
C. The CPI better reflects the goods and services bought by consumers

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4/4/24, 11:12 AM Test 2 - Chapter 24 Measuring the Cost of Living

D. The GDP deflator cannot be used to gauge inflation.

Câu 6: The CPI is a measure of the overall cost of the goods and services bought by

A. A typical consumer, and the CPI is computed and reported by the Ministry of
Industry and Trade
B. Typical consumers and typical business firms, and the CPI is computed and
reported by the Ministry of Industry and Trade
C. A typical consumer, and the CPI is computed and reported by the General
Statistics Office
D. Typical consumers and typical business firms, and the CPI is computed and
reported by the General Statistics Office

Câu 7: The CPI is calculated

A. Weekly
B. Monthly
C. Quarterly
D. Yearly

Câu 8: The steps involved in calculating the consumer price index and the inflation rate,
in order, are as follows:

A. Choose a base year, update the basket, find the prices, estimate the basket’s cost,
compute the index, and compute the inflation rate
B. Choose a base year, fix the basket, find the prices, compute the inflation rate,
compute the basket's cost, and compute the index
C. Fix the basket, find the prices, compute the basket's cost, choose a base year
and compute the index, and compute the inflation rate
D. Fix the basket, find the prices, compute the inflation rate, compute the basket’s
cost, and choose a base year and compute the index.

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4/4/24, 11:12 AM Test 2 - Chapter 24 Measuring the Cost of Living

Câu 9: 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?

A. The quantities of the goods and services purchased

B. The prices of the goods and services
C. The goods and services making up the basket
D. All of the above are correct.

Câu 10: 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.

Câu 11: If the consumer price index was 96 in 2012, 100 in 2013, and 102 in 2014, then
the base year must be

A. 2012
B. 2013
C. 2014
D. The base year cannot be determined from the given information.

Câu 12: Suppose a basket of goods and services has been selected to calculate the CPI
and 2012 has been chosen as the base year. In 2012, the basket’s cost was $80.00; in
2013, the basket’s cost was $84; and in 2014, the basket’s cost was $87.60. The value of
the CPI was

A. 100 in 2012

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B. 105 in 2013
C. 109.5 in 2014
D. All of the above are correct

Câu 13: The inflation rate is

A. The absolute change in real GDP from one period to another

B. Percentage change in real GDP from one period to another
C. Absolute change in the price level from one period to another
D. Percentage change in the price level from one period to another.

Câu 14: Because consumers can sometimes substitute cheaper goods for those that have
risen in price,

A. The CPI overstates inflation

B. The CPI understates inflation
C. The GDP deflator overstates inflation
D. The GDP deflator understates inflation.

Câu 15: 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 $57.25. The value of the
CPI in 2006 was

A. 91.6
B. 104.6
C. 109.2
D. 114.5.

Câu 16: In an imaginary economy, consumers buy only hot dogs and hamburgers. The
fixed basket consists of 10 hot dogs and 6 hamburgers. A hot dog cost $3 in 2006 and
$5.40 in 2007. A hamburger cost $5 in 2006 and $6 in 2007. Which of the following
statements is correct?

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4/4/24, 11:12 AM Test 2 - Chapter 24 Measuring the Cost of Living

A. When 2006 is chosen as the base year, the consumer price index is 90 in 2007
B. When 2006 is chosen as the base year, the inflation rate is 150 percent in 2007
C. When 2007 is chosen as the base year, the consumer price index is 100 in 2006
D. When 2007 is chosen as the base year, the inflation rate is 50 percent in 2007.

Câu 17: During a certain year, the consumer price index increased from 120 to 132 and
the purchasing power of a person’s bank account increased by 4 percent. For that year,

A. The nominal interest rate was 6 percent

B. The nominal interest rate was 14 percent
C. The inflation rate was 12 percent
D. The inflation rate was 9 percent.

Câu 18: Rosa deposits $100 in a bank account that pays an annual interest rate of 20
percent. A year later, after Rosa has accumulated $20 in interest, she withdraws her $120.
Rosa’s purchasing power

A. did not change if the inflation rate was 20 percent

B. Decreased if the inflation rate was -5 percent
C. Increased if the inflation rate was 22 percent
D. More than one of the above is correct.

Câu 19: A worker received $5 for a daily wage in 1930, which has the equivalent value of
$63.24 today. If the CPI was 17 in 1930 what is the value of the CPI today, rounded to
the nearest whole number?

A. 215
B. 134
C. 17
D. 1.3

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Câu 20: The consumer price index was 200 in 2012 and 208 in 2013. The nominal
interest rate during this period was 9 percent. What was the real interest rate during this
period?

A. 5.00 percent
B. 1.00 percent
C. 5.15 percent
D. 13.00 percent

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