191.SupposeOPECsucceedsinraisingworldoilpricesby300percent.Thispriceincreasecausesinventorstolookatalternativesourcesoffuelforinternal-combustionengines.Ahydrogen-poweredengineisdevelopedwhichischeapertooperatethangasolineengines.WhichproblemsintheconstructionoftheCPIdoesthissituationrepresent?
a.substitutionbiasandintroductionofnewgoods
b.introductionofnewgoodsandunmeasuredqualitychange
c.substitutionbiasandunmeasuredqualitychange
d.incomebiasandsubstitutionbias
192.Whichoftheseeventswouldcausetheconsumerpriceindextooverstatetheincreaseinthecostofliving?
a.Carmakersbenefitfromanewtechnologythatallowsthemtosellhigher-qualitycarstoconsumerswithnoincreaseinprice.
b.Energypricesdecrease,andconsumersrespondbybuyingmoregasandelectricity.
c.Anewgoodisintroducedthatrenderscellulartelephonesinferiorandobsolete.
d.Alloftheabovearecorrect.
193.Whichofthefollowingstatementsbestrepresentseconomists’beliefsaboutthebiasintheCPIasameasureofthecostofliving?
a.EconomistsagreethatthebiasintheCPIisaveryseriousproblem.
b.EconomistsagreethatthebiasintheCPIisnotaseriousproblem.
c.EconomistsagreeontheseverityoftheCPIbias,butthereisstilldebateonwhattodoaboutit.
d.ThereisstilldebateamongeconomistsontheseverityoftheCPIbiasandwhattodoaboutit.
194.Severalstudiesinthe1990sconcludedthattheconsumerpriceindexoverstatedinflationbyabout
a.3percentagepointsperyear,andthatnumberofpercentagepointslikelystillappliesnow.
b.3percentagepointsperyear,butrecentimprovementstotheCPIprobablyhavereducedtheoverstatementofinflationtosomethinglessthan3percentagepoints.
c.1percentagepointperyear,andthatnumberofpercentagepointslikelystillappliesnow.
d.1percentagepointperyear,butrecentimprovementstotheCPIprobablyhavereducedtheoverstatementofinflationtosomethinglessthan1percentagepoint
195.RecentchangesinmethodsusedtocomputetheCPIhavemadethe
a.upwardbiasintheCPIinflationratemoreseverethanitusedtobe.
b.upwardbiasintheCPIinflationratelessseverethanitusedtobe.
c.downwardbiasintheCPIinflationratemoreseverethanitusedtobe.
d.downwardbiasintheCPIinflationratelessseverethanitusedtobe.
196.Theproblemswithusingtheconsumerpriceindexasameasureofthecostoflivingareimportantbecause
a.eventheappearanceofhighratesofinflationcausevoterstobecomedisenchanted.
b.politicianshavemanipulatedthemeasurementproblemstotheiradvantage.
c.manygovernmentprogramsusetheCPItoadjustforchangesintheoveralllevelofprices.
d.ifthepricelevelisoverstated,consumerswillbetakenadvantageofbysellersofconsumergoods.
197.TheGDPdeflatorreflectsthe
a.levelofpricesinthebaseyearrelativetothecurrentlevelofprices.
b.currentlevelofpricesrelativetothelevelofpricesinthebaseyear.
c.levelofrealoutputinthebaseyearrelativetothecurrentlevelofrealoutput.
d.currentlevelofrealoutputrelativetothelevelofrealoutputinthebaseyear.
198.Twoalternativemeasuresoftheoveralllevelofpricesare
a.theinflationrateandtheconsumerpriceindex.
b.theinflationrateandtheGDPdeflator.
c.theGDPdeflatorandtheconsumerpriceindex.
d.thecostoflivingindexandnominalGDP.
199.TheCPIandtheGDPdeflator
a.generallymovetogether.
b.generallyshowdifferentpatternsofmovement.
c.alwaysshowidenticalchanges.
d.alwaysshowdifferentpatternsofmovement.
200.AnimportantdifferencebetweentheGDPdeflatorandtheconsumerpriceindexisthat
a.theGDPdeflatorreflectsthepricesofgoodsandservicesboughtbyproducers,whereastheconsumerpriceindexreflectsthepricesofgoodsandservicesboughtbyconsumers.
b.theGDPdeflatorreflectsthepricesofallfinalgoodsandservicesproduceddomestically,whereastheconsumerpriceindexreflectsthepricesofgoodsandservicesboughtbyconsumers.
c.theGDPdeflatorreflectsthepricesofallfinalgoodsandservicesproducedbyanation’scitizens,whereastheconsumerpriceindexreflectsthepricesofallfinalgoodsandservicesboughtbyconsumers.
d.theGDPdeflatorreflectsthepricesofallfinalgoodsandservicesboughtbyproducersandconsumers,whereastheconsumerpriceindexreflectsthepricesofallfinalgoodsandservicesboughtbyconsumers.
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