Question :
11.Changesinthequalityofagood
a.donotpresentaproblemintheconstructionoftheconsumerpriceindex.
b.presentaproblemintheconstructionoftheconsumerpriceindex,andthatproblemissometimesreferredtoa : 1261700
11.Changesinthequalityofagood
a.donotpresentaproblemintheconstructionoftheconsumerpriceindex.
b.presentaproblemintheconstructionoftheconsumerpriceindex,andthatproblemissometimesreferredtoassubstitutionbias.
c.arenotaccountedfor,asamatterofpolicy,bytheBureauofLaborStatistics.
d.canleadtoeitheranincreaseoradecreaseinthevalueofadollar.
12.Theintroductionofthevideocassetterecorderinthe1970sexemplifiedaprobleminmeasuringthecostofliving;thatproblemistheproblemof
a.substitutionbias.
b.product-improvementbias.
c.introductionofnewgoods.
d.unmeasuredqualitychange.
13.Anincreaseinthepriceofimportedcoffeeshowsup
a.intheconsumerpriceindexandintheGDPdeflator.
b.intheconsumerpriceindex,butnotintheGDPdeflator.
c.intheGDPdeflator,butnotintheconsumerpriceindex.
d.inneithertheconsumerpriceindexnorintheGDPdeflator.
14.Every unit ofgoodxthatisproducedintheUnitedStatesisexportedtoothercountries.Anincreaseinthepriceofgoodxshowsup
a.intheconsumerpriceindexandintheGDPdeflator.
b.intheconsumerpriceindex,butnotintheGDPdeflator.
c.intheGDPdeflator,butnotintheconsumerpriceindex.
d.inneithertheconsumerpriceindexnorintheGDPdeflator.
15.InwhichofthefollowingcaseswouldtherebeaneffectonthevalueoftheU.S.consumerpriceindex,butnotonthevalueoftheU.S.GDPdeflator?
a.AllofthetrucktiresthatareproducedbyacertaincompanyinSouthKoreaaresoldtotheU.S.military,andthepriceofthesetiresdecreases.
b.AllofthetrucktiresthatareproducedbyacertaincompanyinCaliforniaaresoldtotheU.S.military,andthepriceofthesetiresdecreases.
c.MostofthebananasthatareproducedbyacertaincompanyinHondurasendupinU.S.grocerystores,andthepriceofthesebananasincreases.
d.Mostoftheearth-movingmachinesthatareproducedbyacertaincompanyinIllinoisareexportedtoothercountries,andthepriceofthesemachinesincreases.
16.Supposethetypicalconsumerbuysmorebananasthanoranges.Infixingthebasketofgoodsandservicesforthepurposeofcalculatingtheconsumerpriceindex,theBureauofLaborStatistics
a.ignoresthefactthatthetypicalconsumerbuysmorebananasthanorange;thisproceduredoesnotaffectthevalueoftheindex.
b.ignoresthefactthatthetypicalconsumerbuysmorebananasthanorange;thisprocedureresultsinapotentially-seriousbiasintheindex.
c.placesmoreweightonthepriceofbananasthanonthepriceoforanges;theweightsofthetwopricesaredeterminedbysurveyingconsumers.
d.placesmoreweightonthepriceofbananasthanonthepriceoforanges;theweightsofthetwopricesaredeterminedbytheextenttowhichthosepriceshavechangedoverthepreviousyear.
17.Forthepurposeofcalculatingtheconsumerpriceindex,thebasketofgoods
a.iskeptthesamefromyeartoyearsothattheeffectsofpricechangesareisolatedfromtheeffectofanyquantitychangesthatmightbeoccurringatthesametime.
b.iskeptthesamefromyeartoyear;otherwise,thevalueoftheindexwouldremainconstantfromyeartoyear.
c.variesfromyeartoyear;otherwise,thevalueoftheindexwouldremainconstantfromyeartoyear.
d.variesfromyeartoyearsothatconsumers’buyingpatternsareupdatedinatimelyfashion.
18.Whichofthefollowingstatementsiscorrect?
a.Inordertocalculatetheinflationratefortheyear2011,weneedtoknowthevaluesoftheconsumerpriceindexfortheyears2009,2010,and2011.
b.Changesintheconsumerpriceindexareoftenthoughttobeusefulinpredictingchangesintheproducerpriceindex.
c.Despiteitsname,the“consumerpriceindex”reallymeasurestheoverallcostofthegoodsandservicesboughtbyconsumers,businessfirms,andunitsofgovernment.
d.Ifthepricesofallgoodsandserviceschangedproportionatelyovertime,thentheconsumerpriceindexwouldreflectnosubstitutionbias.
19.Withrespecttotheconsumerpriceindex,thesubstitutionbiasarisesbecause
a.pricesofgoodsandservicesdonotchangeinthesameproportionfromyeartoyear.
b.consumersareslowtoadjusttheirbuyingpatternsfromyeartoyearinresponsetopricechanges.
c.consumersareeagertobuynewproductsastheyareintroduced,despitetheirlackoffullinformationaboutthequalityofthoseproductsuntiltheybuyandusethem.
d.Alloftheabovearecorrect.
20.Withrespecttotheconsumerpriceindex,whichofthefollowingservesasanexampleofhowthesubstitutionbiasarises?Between2010and2011,thepriceofapoundofpeanuts
a.risesfrom$0.80to$1.00whilethepriceofaloafofbreadrisesfrom$2.00to$2.50.
b.fallsfrom$0.90to$0.72whilethepriceofaloafofbreadfallsfrom$2.00to$1.60.
c.remainsconstant,asdoesthepriceofaloafofbread.
d.Noneoftheaboveservesasanexampleofhowthesubstitutionbiasarises.