When to consumer price index rises, the typical family
What is has to spend more dollars to maintain the same standard of living
100
When the quality of a good deteriorates, the purchasing power of the dollar
What is decreases, so the CPI understates the change in the cost of living if the quality change is not accounted for
100
The nominal interest rate tells you
What is how fast the number of dollars in your bank account rises over time
200
What basket of goods is used to construct the CPI?
What is the goods and services that are typically bought by consumers as determined by government surveys
200
Suppose that dairy products have risen in price relatively less than prices in general over the last several years. To which problem in the construction of the CPI is this "low" rate of price increase most relevant?
What is substitution bias
200
Which of the following is the most accurate statement about nominal and real interest rates?
What is nomial and real interest rates often do not move together
300
The goal of the consumer price index is to measure changes in the
What is cost of living
300
If the prices of Australian-made shoes imported into the United States increase, then, as a result
What is the consumer price index will increase, but the GDP deflator will not increase
300
Ms. Smith borrowed $1000 from her bank for one year at an interest rate of 10 percent. During that year the price level went up by 15 percent. Which of the following statements is correct?
What is Ms. Smith's repayment will give the bank less purchasing power than it originally loaned her.
400
To which of the problems is the construction of the CPI is the invention of pocket-sized computers most relevant?
What is introduction of new goods
400
By itself, a reduction in the price of large tractors imported into the United States from Russia
What is leaves both the GDP deflator and the CPI unchanged
400
The inflation rate
What is by determining the percentage increase in the price index from the preceding period
500
For some racquet sports there have been increases in the size of the raquets; also, the methods and materials used for making raquets have improved. To which problem is the construction of the CPI are these facts most relevant?
What is unmeasured quality change
500
You know that a candy bar cost five cents in 1962. You also know the CPI for 1962 and the CPI for today. Which of the following would you use to compute the price of the candy bar in today's prices
What is five cents x (today's CPI/1962 CPI)
500
Indexation refers to
What is using a law or contract to automatically correct a dollar amount for the effects of inflation