Question :
31) Refer to Table 13-8. Suppose that the data in : 1244722
31) Refer to Table 13-8. Suppose that the data in the table above reflect the price levels in the economy. What is the inflation rate in between 2012 and 2013?
A) 2%
B) 5%
C) 10%
D) 12%
E) 20%
Table 13-9
Year
CPI
(1982-1984 =100)
2012
100
2013
113
32) Refer to Table 13-9. Suppose that the data in the table above reflect the price levels in the economy. Given that data, we can say that the cost of living rose by ________ between 2012 and 2013?
A) 2%
B) 5%
C) 8%
D) 11%
E) 13%
33) Monthly expenditures for a family of 4 in 2012 averaged $1,400. In 2013, the cost of the same purchases was $1,500. If 2012 is the base year, what was the CPI in 2013?
A) 110
B) 107
C) 100
D) 93
34) If the CPI changes from 125 to 120 between 2012 and 2013, how did prices change between 2012 and 2013?
A) Prices increased by 5%.
B) Prices decreased by 5%
C) Prices increased by 25%.
D) Prices decreased by 4%.
35) Which of the following describes the accuracy of the Consumer Price Index?
A) Changes in the CPI accurately reflect the true rate of inflation.
B) Changes in the CPI understate the true rate of inflation.
C) Changes in the CPI overstate the true rate of inflation.
D) Changes in the CPI are unrelated to the true rate of inflation.
36) If the CPI rises from 206.7 to 212.7 between two consecutive years, by how much has the cost of living changed between these two years?
A) The cost of living has increased by 6%.
B) The cost of living has increased by 2.9%.
C) The cost of living has increased by 12.7%.
D) The cost of living has decreased by 6%.
37) If consumers purchase fewer of those products that increase most in price and more of those products that decrease in price as compared to the CPI basket, then
A) changes in the CPI accurately reflect the true rate of inflation.
B) changes in the CPI understate the true rate of inflation.
C) changes in the CPI overstate the true rate of inflation.
D) changes in the CPI are unrelated to the true rate of inflation.
38) Most economists believe that biases cause changes in the CPI to overstate the inflation rate by ________ percentage points.
A) 0.1 to 0.2
B) 0.2 to 2.0
C) 0.4
D) 0.5 to 1.0
E) 1.0 to 3.0
39) The formula for calculating the CPI is
A) (Expenditures in the current year/Expenditures in the base year) × 100.
B) (Expenditures in the current year × Expenditures in the base year)/100.
C) (Expenditures in the base year/Expenditures in the current year).
D) (Expenditures in the base year × 100)/(Expenditures in the current year).
40) When the price of gasoline rises, some consumers begin riding their bikes more frequently or riding the bus instead of driving their cars. The fact that the CPI does not fully account for such changes in consumer behavior is called
A) outlet bias.
B) increase in quality bias.
C) substitution bias.
D) discrimination bias.
