Question 1 of 48 1 0 1 0 Points Andrew is offered a job in Little Rock where the CPI is 80 and a job in New York where the CPI is 125 Andrew s job offer in Little Rock is for 42 000 How much does the New York job have to pay in order for the two salaries to represent about the same purchasing power A 74 667 B 65 625 C 60 900 D cannot be determined with this information Answer Key D Question 2 of 48 1 0 1 0 Points 000027 The expected rate of inflation is built into current nominal rates of interest A True B False Answer Key True Question 3 of 48 1 0 1 0 Points Deflation is defined as A a decrease in the inflation rate B a fall in the average price level C a period during which the average price level is low D a low rate of change in average prices Answer Key B Question 4 of 48 1 0 1 0 Points Changes in the producer price index are often thought to be useful in predicting changes in A stock prices B the consumer price index C the unemployment rate D the rate of output of goods and services Answer Key B Question 5 of 48 1 0 1 0 Points In which year s was the increase in nominal GDP over the previous year due exclusively to the increase in output Units of Output Price per unit Year 1994 40 000 10 1995 30 000 12 1996 50 000 12 1997 70 000 14 1998 60 000 16 1999 60 000 17 A in 1996 B in 1999 C in 1998 D in none of the years given in the Table Answer Key A Question 6 of 48 1 0 1 0 Points Along an actual observed Phillips curve A aggregate output varies inversely with the unemployment rate B aggregate output directly inversely with the inflation rate C the inflation rate varies inversely with the unemployment rate D the inflation rate varies directly with the unemployment rate Answer Key C Question 7 of 48 1 0 1 0 Points 000017 Deflation is bad because A wages decline B prices decline C monetary policy becomes impotent D fiscal policy becomes impotent E deflation is not bad Answer Key C Question 8 of 48 1 0 1 0 Points 000033 Measuring the rate of inflation using a market basket that excludes food and energy prices is preferred by some analysts because this measure called core inflation A provides a real rather than a nominal rate of inflation B gives a better measure of ongoing sustained price changes C is more consistent with measures of inflation used in other countries D fluctuates more than measures of inflation that include food and energy prices Answer Key B Question 9 of 48 1 0 1 0 Points 000032 The CPI is determined by computing A an average of prices of all goods and services B the price of a basket of goods and services that changes every year relative to the same basket in a base year C the price of a fixed basket of goods and services relative to the price of the same basket in a base year D nominal GDP relative to real GDP Answer Key C Question 10 of 48 1 0 1 0 Points The consumer price index is used to A differentiate gross national product from net national product B turn dollar figures into meaningful measures of purchasing power C characterize the types of goods and services that consumers purchase D measure the quantity of goods and services that the economy produces Answer Key B Question 11 of 48 1 0 1 0 Points If the real GDP in 2003 is 12 400 billion and the implicit price deflator is 1 4 what is the value of nominal GDP in 2003 A approximately 886 billion B approximately 8 857 billion C approximately 15 427 billion D 17 360 billion Answer Key D Question 12 of 48 1 0 1 0 Points Which of the following is not a consequence of deflation A Deflation causes uncertainty about the future B The threat of deflation can make people reluctant to borrow for long periods C Deflation causes the real value of money to fall D Firms may be reluctant to undertake investments for fear that the prices at which they can sell their output will drop Answer Key C Question 13 of 48 1 0 1 0 Points To measure the core inflation rate the Bureau of Economic Analysis uses a price measure that A excludes food and energy prices because the prices of these items can be volatile B includes food and energy prices because the se items account for a significant portion of the typical consumer s expenditures C is made up of a fixed basket that includes durable goods non durable goods and services D includes prices for different components of gross private domestic investment government spending and personal consumption expenditures Answer Key A Question 14 of 48 1 0 1 0 Points Which of the following statements is true The CPI is computed using a fixed basket of goods The implicit price deflator is computed a fixed basket of goods The CPI and the implicit price deflator can be used to calculate inflation A I II and III B I and II only C I and III only D II and III only Answer Key C Question 15 of 48 1 0 1 0 Points Rising inflation means A that the price level is increasing by a given percentage rate B that the prices of all goods and services increase from year to year C that the price level is rising at an increasing rate D that the price level is rising at a variable rate Answer Key C Question 16 of 48 1 0 1 0 Points An indexed payment is one A whose real value changes with the rate of change in the price level B whose nominal value is held constant C whose dollar value changes with the rate of change in the price level D whose nominal value is equal to its value Answer Key C Question 17 of 48 1 0 1 0 Points A period of time against which costs of the market basket in other periods will be compared in computing a price index is called A the inflation period B the market basket C the adjustment period D the base period Answer Key D Question 18 of 48 1 0 1 0 Points What is a hyperinflation A It is an inflation rate in excess of 200 percent per year B It is a combination of excessive increase in the price level and rising unemployment C It refers to a situation where a country s money supply is no longer backed by gold D It is a situation in which financial markets collapse and the government is forced to print money Answer Key A Question 19 of 48 1 0 1 0 Points Economic data that are adjusted for price level changes are said …