11.IntheCPI,goodsandservicesareweightedaccordingto
a.howlongamarkethasexistedforeachgoodorservice.
b.theextenttowhicheachgoodorserviceisregardedbythegovernmentasanecessity.
c.howmuchconsumersbuyofeachgoodorservice.
d.thenumberoffirmsthatproduceandselleachgoodorservice.
12.InthecalculationoftheCPI,booksaregivengreaterweightthanmagazinesif
a.consumersbuymorebooksthanmagazines.
b.thepriceofbooksishigherthanthepriceofmagazines.
c.itcostsmoretoproducebooksthanitcoststoproducemagazines.
d.booksaremorereadilyavailablethanmagazinestothetypicalconsumer.
13.InthecalculationoftheCPI,teaisgivengreaterweightthanbeerif
a.thepriceofteaishigherthanthepriceofbeer.
b.itcostsmoretoproduceteathanitcoststoproducebeer.
c.teaismorereadilyavailablethanbeertothetypicalconsumer.
d.consumersbuymoreteathanbeer.
14.IncalculatingtheCPI,afixedbasketofgoodsandservicesisused.Thequantitiesofthegoodsandservicesinthefixedbasketaredeterminedby
a.surveyingconsumers.
b.surveyingsellersofthegoodsandservices.
c.workingbackwardfromtherateofinflationtoarriveatimputedvaluesforthosequantities.
d.arbitrarychoicesmadebyfederalgovernmentemployees.
15.WhatbasketofgoodsandservicesisusedtoconstructtheCPI?
a.arandomsampleofallgoodsandservicesproducedintheeconomy
b.thegoodsandservicesthataretypicallyboughtbyconsumersasdeterminedbygovernmentsurveys
c.onlyfood,clothing,transportation,entertainment,andeducation
d.theleastexpensiveandthemostexpensivegoodsandservicesineachmajorcategoryofconsumerexpenditures
16.Considerasmalleconomyinwhichconsumersbuyonlytwogoods:applesandpears.Inordertocomputetheconsumerpriceindexforthiseconomyfortwoormoreconsecutiveyears,weassumethat
a.thenumberofapplesboughtbythetypicalconsumerisequaltothenumberofpearsboughtbythetypicalconsumerineachyear.
b.neitherthenumberofapplesnorthenumberofpearsboughtbythetypicalconsumerchangesfromyeartoyear.
c.thepercentagechangeinthepriceofapplesisequaltothepercentagechangeinthepriceofpearsfromyeartoyear.
d.neitherthepriceofapplesnorthepriceofpearschangesfromyeartoyear.
17.Considerasmalleconomyinwhichconsumersbuyonlytwogoods:pretzelsandcookies.Inordertocomputetheconsumerpriceindexforthiseconomyfortwoormoreconsecutiveyears,weassumethat
a.thepercentagechangeinthepriceofpretzelsisequaltothepercentagechangeinthepriceofcookiesfromyeartoyear.
b.thenumberofpretzelsboughtbythetypicalconsumerisequaltothenumberofcookiesboughtbythetypicalconsumerineachyear.
c.neitherthenumberofpretzelsnorthenumberofcookiesboughtbythetypicalconsumerchangesfromyeartoyear.
d.neitherthepriceofpretzelsnorthepriceofcookieschangesfromyeartoyear.
18.TocalculatetheCPI,theBureauofLaborStatisticsuses
a.thepricesofallgoodsandservicesproduceddomestically.
b.thepricesofallfinalgoodsandservices.
c.thepricesofallconsumergoods.
d.thepricesofsomeconsumergoods.
19.Whencomputingthecostofthebasketofgoodsandservicespurchasedbyatypicalconsumer,whichofthefollowingchangesfromyeartoyear?
a.thequantitiesofthegoodsandservicespurchased
b.thepricesofthegoodsandservices
c.thegoodsandservicesmakingupthebasket
d.Alloftheabovearecorrect.
20.Incomputingtheconsumerpriceindex,abaseyearischosen.Whichofthefollowingstatementsaboutthebaseyeariscorrect?
a.Thebaseyearisalwaysthefirstyearamongtheyearsforwhichcomputationsarebeingmade.
b.Itisnecessarytodesignateabaseyearonlyinthesimplestcaseoftwogoods;inmorerealisticcases,itisnotnecessarytodesignateabaseyear.
c.Thevalueoftheconsumerpriceindexisalways100inthebaseyear.
d.Thebaseyearisalwaystheyearinwhichthecostofthebasketwashighestamongtheyearsforwhichcomputationsarebeingmade.
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