CPI is calculated by the |
Bureau of Labor Statistics |
CPI is the measure of |
average prices paid by consumers for a fixed basket of goods and services |
The Consumer Price Index (CPI) measures the changes of the |
prices paid by consumers for a fixed market basket of consumer goods and services |
the Consumer Price Index measures the average prices paid by |
urban consumers for a fixed market basket of goods and services. |
For the CPI to provide an accurate measure of the prices paid by urban consumers, it is necessary to |
have a market basket that is consistent and corresponds to what households actually purchase. |
Constructing the CPI involves which of the following stages? |
D |
The Consumer Expenditure Survey measures |
households spending patterns |
To measure the CPI, the BLS economic assistants check the prices of |
C |
To measure the CPI, the BLS economic assistants check the prices of |
C |
Prices of goods and services in the CPI market basket are collected |
monthly |
The reference base period that the BLS uses to measure the CPI is |
A |
The reference base period for the CPI has an index number of |
100 |
The items included in the CPI are |
goods and services consumed by the typical urban household |
The Consumer Price Index market basket contains |
goods and services purchased by an average urban household |
The Consumer Price Index measures the average of the prices paid by urban consumers for a ________ of consumer goods and services. |
fixed market basket |
The CPI market basket is determined by |
consumer survey |
For the CPI, the market basket of good and services is modified |
A |
According to the CPI basket, the largest item in the households’ budgets is |
B |
What is the good or service is given the most weight in the CPI? |
C |
The CPI market basket |
B |
The CPI market basket |
A |
When calculating the CPI, the Bureau of Labor Statistics |
A |
The formula for the CPI is |
B |
If the prices of the goods and services contained in the CPI market basket increase from the base period to the next year, we know that |
B |
The inflation rate is the |
B |
The inflation rate measures the |
B |
Which of the following formulas is used to calculate the inflation rate? |
C |
If the CPI decreases from one year to the next, then the inflation rate is |
D |
In the United States between 1971 and 2011, the inflation rate |
D |
Since 1305, of the following centuries the inflation rate has been the highest during the |
C |
If we look back at inflation data since 1300, we see that |
D |
According to the historical record of inflation since the 1300s, the inflation rate |
A |
Since 1300, the inflation rate has been greater than 2 percent per year and reaching its highest peaks |
E |
The Consumer Price Index (CPI) measures |
C |
The period for which the Consumer Price Index is defined to equal 100 is called the |
reference base period |
In the United States, the good or service given the most weight in the CPI basket when calculating the CPI is |
housing |
If we compare the CPI to a perfect cost of living index, we find that they are |
different because the CPI uses a fixed basket and has some measurement difficulties |
Economists agree that the CPI |
is a possibly biased measure of the cost of living |
When economists speak of the CPI bias, they are referring to |
the tendency for the CPI to overstate price changes |
Which of the following is NOT a source of bias in the CPI? |
C |
Which of the following makes the Consumer Price Index a less accurate measure of the cost of living? |
C |
Which of the following is a bias in the CPI? |
D |
The CPI is biased because it |
does not alwyays take into account the chan ges in product quality |
If the CPI is used as a cost of living index, incomes that are adjusted to reflect the changes in the CPI will |
A |
The presence of new goods that are of higher quality than the old goods leads the BLS to |
C |
When a good gets better from one year to the next, the CPI has a what is called |
B |
An example of the quality change bias, and not a new goods bias, in the calculation of the CPI is a price increase in |
C |
The quality change bias is most likely to put ________ into the CPI and so ________ the inflation rate. |
C |
When discussing CPI, the term ‘commodity substitution bias’ refers to changes in |
prices that lead households to change the items they buy |
CPI overstates inflation because the average consumer buys |
less of those goods whose relative price has risen |
When conducting the CPI, the BLS has to deal with commodity substitution bias, which is defined as |
consumers substitution of cheaper goods for goods whose prices increase |
The fact the consumers substitute one good for another when prices change is |
not taken into account by the fixed market basket used in calculating the CPI |
If higher prices cause buyer to shop at discount stores, the CPI has |
an outlet substitution bias |
The bias in the CPI affects government outlays because the overstatement of inflation |
increases government outlays by more than what is justified |
The GDP deflator is |
a measure of the price level |
If we compare the last 30 years of inflation as recorded by the CPI and the PCE price index, we find that the |
2 measures fluctuate together |
Comparing CPI and PCE price fluctuations, the |
CPI tends to exceed PCE price index. |
The price of dishwashers has remained relatively constant while the quality of dishwashers has improved. The CPI has an upward bias if |
it is not adjusted to take account of higher quality |
The CPI bias was estimated by the CAC on the CPI as |
overstating the actual inflation rate by about 1% per year |
A consequence of CPI bias is that it |
distorts private contracts |
Difference between nominal and real dollars, |
nominal is current dollars and real is measured dollars in a given year |
To compare the price of a loaf of bread in 1993 with now, you should compare the value of bread in |
real prices |
A change in the real wage rate measures the change in the |
quantity of goods and services that an hours work can buy |
Suppose that residents of France have seen their real wage rate increase over time. This means that |
French workers have increased buying power |
The change in the quantity of goods and services that an hours work can buy is measured by |
real wage |
The % return on a loan expressed in terms of goods and services in the |
real interest rate |
Real interest rate equals |
nominal interest rate minus the inflation rate |
If the real interest rate is negative if the inflation rate |
exceeds the nominal interest rate |
Can real interest be negative? |
yes |
Nominal wage rate is |
average hourly wage rate measured in current dollars |
You borrow at a nominal interest rate of 10%. If inflation is 4%, the the real interest rate is |
6% |
In the past 40 years, nominal interest has ______ real interest in virtually all years. |
exceede |
Macro set 6
Share This
Unfinished tasks keep piling up?
Let us complete them for you. Quickly and professionally.
Check Price