11.Which of the following goods is least likely to be in a market basket?
A. Helicopter
B. Gasoline
C. Barbie dolls
D. Breakfast cereal
12.By using the market basket approach:
A. it allows us to see how your cost of living is affected by the changing prices of different goods relative to how much of each good you buy.
B. we get a more accurate picture of the changing cost of living than by simply averaging the changing prices of goods listed in the market basket.
C. we get a clearer picture of the changing cost of living than by averaging the changing prices of all goods and services produced.
D. All of these statements are true.
13.The market basket approach:
A. measures changes in the cost of your shopping basket, assuming that you buy the same items in the same quantities.
B. gives us a single number to measure how much your total costs rise over time.
C. makes a lot more sense than simply averaging the increase in the price of each grocery item.
D. All of these statements are true.
14.The market basket approach:
A. gives us a single number that represents how changing prices affect the typical consumer.
B. gives us a list of what the typical consumer buys and the average price change of those goods.
C. tells us how the prices of all goods and services in an economy change over time.
D. All of these statements are true.
15.A price index:
A. measures how much the cost of a market basket has risen or fallen relative to the cost in a base time period or location.
B. summarizes the changes in the cost of living.
C. allows us to see clearly the changes in the cost of a market basket over time or across different locations.
D. All of these statements are true.
16.The most commonly used price index to track changes in prices for the typical household in the U.S. is:
A. consumer price index.
B. basket price index.
C. retail price index.
D. producer price index.
17.The consumer price index is calculated by:
A. the Bureau of Labor Statistics.
B. the Congressional Budget Office.
C. the National Bureau of Economic Research.
D. the Social Security Office.
18.The consumer price index:
A. measures the increase in the cost of the market basket relative to the cost in a given base year.
B. is always 100 in the base year.
C. helps us understand how the cost of living today compares with the cost of living at some time in the past.
D. All of these statements are true.
19.Suppose the base year of the CPI is 2010, and the CPI calculated for 2012 was 102. What is the correct interpretation of this number?
A. Average prices in the economy have increased by 102 percent since 2010.
B. Average prices in the economy have increased by 4 percent since 2010.
C. The cost of living for a typical consumer is 2 percent higher than it was in 2010.
D. The average goods of consumers has risen an average of 2 percent from 2010 to 2012.
20.
According to the table shown, which year is most likely being used for the base year?
A. 2008
B. 2009
C. 2010
D. 2011
