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.