Question :
Multiple Choice – Section 00: Introduction
1.BabeRuth,thefamousbaseballplayer,earned$80,000in1931.Today,thebestbaseballplayerscanearnmorethan400timesasmuchasBabeRuthearnedin1931.However,priceshavealsorisensince1931.Weca : 1261682
Multiple Choice – Section 00: Introduction
1.BabeRuth,thefamousbaseballplayer,earned$80,000in1931.Today,thebestbaseballplayerscanearnmorethan400timesasmuchasBabeRuthearnedin1931.However,priceshavealsorisensince1931.Wecanconcludethat
a.thebestbaseballplayerstodayareabout400timesbetteroffthanBabeRuthwasin1931.
b.becausepriceshavealsorisen,thestandardoflivingofbaseballstarshasn’tchangedsince1931.
c.onecannotmakejudgmentsaboutchangesinthestandardoflivingbasedonchangesinpricesandchangesinincomes.
d.onecannotdeterminewhetherbaseballstarstodayenjoyahigherstandardoflivingthanBabeRuthdidin1931withoutadditionalinformationregardingincreasesinpricessince1931.
2.Theconsumerpriceindexisusedto
a.monitorchangesinthelevelofwholesalepricesintheeconomy.
b.monitorchangesinthecostoflivingovertime.
c.monitorchangesinthelevelofrealGDPovertime.
d.monitorchangesinthestockmarket.
3.Theconsumerpriceindexisusedto
a.convertnominalGDPintorealGDP.
b.turndollarfiguresintomeaningfulmeasuresofpurchasingpower.
c.characterizethetypesofgoodsandservicesthatconsumerspurchase.
d.measurethequantityofgoodsandservicesthattheeconomyproduces.
4.Whichofthefollowingisnotcorrect?
a.Theconsumerpriceindexgiveseconomistsawayofturningdollarfiguresintomeaningfulmeasuresofpurchasingpower.
b.Theconsumerpriceindexisusedtomonitorchangesinthecostoflivingovertime.
c.Theconsumerpriceindexisusedbyeconomiststomeasuretheinflationrate.
d.Theconsumerpriceindexisusedtomeasurethequantityofgoodsandservicesthattheeconomyisproducing.
5.Whentheconsumerpriceindexrises,thetypicalfamily
a.hastospendmoredollarstomaintainthesamestandardofliving.
b.canspendfewerdollarstomaintainthesamestandardofliving.
c.findsthatitsstandardoflivingisnotaffected.
d.canoffsettheeffectsofrisingpricesbysavingmore.
6.Whentheconsumerpriceindexfalls,thetypicalfamily
a.hastospendmoredollarstomaintainthesamestandardofliving.
b.canspendfewerdollarstomaintainthesamestandardofliving.
c.findsthatitsstandardoflivingisnotaffected.
d.cansavelessbecausetheydonotneedtooffsettheeffectsofrisingprices.
7.Economistsusetheterminflationtodescribeasituationinwhich
a.somepricesarerisingfasterthanothers.
b.theeconomy’soverallpricelevelisrising.
c.theeconomy’soverallpricelevelishigh,butnotnecessarilyrising.
d.theeconomy’soveralloutputofgoodsandservicesisrisingfasterthantheeconomy’soverallpricelevel.
8.Theterminflationisusedtodescribeasituationinwhich
a.theoveralllevelofpricesintheeconomyisincreasing.
b.incomesintheeconomyareincreasing.
c.stock-marketpricesarerising.
d.theeconomyisgrowingrapidly.
9.Whentheoveralllevelofpricesintheeconomyisincreasing,economistssaythattheeconomyisexperiencing
a.economicgrowth.
b.stagflation.
c.inflation.
d.deflation.
10.Theinflationrateisdefinedasthe
a.pricelevelinaneconomy.
b.changeinthepricelevelfromoneperiodtothenext.
c.percentagechangeinthepricelevelfromthepreviousperiod.
d.pricelevelminusthepricelevelfromthepreviousperiod.
11.Theeconomy’sinflationrateisthe
a.pricelevelinthecurrentperiod.
b.changeinthepricelevelfromthepreviousperiod.
c.changeinthegrossdomesticproductfromthepreviousperiod.
d.percentagechangeinthepricelevelfromthepreviousperiod.
12.Theinflationrateyouarelikelytohearonthenightlynewsiscalculatedfrom
a.theGDPdeflator.
b.theCPI.
c.theDowJonesIndustrialAverage.
d.theunemploymentrate.
13.Whichofthefollowingiscorrect?
a.TheGDPdeflatorisbetterthantheCPIatreflectingthegoodsandservicesboughtbyconsumers.
b.TheCPIisbetterthantheGDPdeflatoratreflectingthegoodsandservicesboughtbyconsumers.
c.TheGDPdeflatorandtheCPIareequallygoodatreflectingthegoodsandservicesboughtbyconsumers.
d.TheGDPdeflatorismorecommonlyusedasagaugeofinflationthantheCPIis.
14.TheCPIismorecommonlyusedasagaugeofinflationthantheGDPdeflatorisbecause
a.theCPIiseasiertomeasure.
b.theCPIiscalculatedmoreoftenthantheGDPdeflatoris.
c.theCPIbetterreflectsthegoodsandservicesboughtbyconsumers.
d.theGDPdeflatorcannotbeusedtogaugeinflation.
15.Whichofthefollowingstatementsiscorrect?
a.TheCPIcanbeusedtocomparedollarfiguresfromdifferentpointsintime.
b.ThepercentagechangeintheCPIisameasureoftheinflationrate,butthepercentagechangeintheGDPdeflatorisnotameasureoftheinflationrate.
c.Comparedtotheconsumerpriceindex(CPI),theGDPdeflatoristhemorecommongaugeofinflation.
d.TheGDPdeflatorbetterreflectsthegoodsandservicesboughtbyconsumersthandoestheCPI.