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Price Indices and Inflation

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Zachary Foust

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Study Game - Topic 2.4


Study Game - Topic 2.4Versión en línea Price Indices and Inflation por Zachary Foust 1 The table shows the cost of the same representative basket of goods in the base year 2012 and in 2013, and the average weekly nominal wage rate in 2012 and 2013. If 2012 is the base year, which of the following is true? a The inflation rate from 2012 to 2013 is 10%. b The CPI in year 2013 is 110. c The CPI in year 2013 is 120. d Based on the CPI, the average real weekly wage rate increased by 10% from 2012 to 2013. 2 Which of the following explains why the rate of change of the consumer price index (CPI) tends to overstate the actual inflation rate? a Consumers will require more income to buy goods whose prices have increased. b Nominal wages do not always increase by as much as prices do. c When real wages increase, consumers can afford higher-priced goods. d Consumers tend to substitute lower-priced goods that may not be represented in the basket of goods. 3 In 2017 Sabrina earned an annual salary of $100,000 as an engineer. In 2018, her income rose to $105,000. The inflation rate in 2018 was 2%. How did Sabrina’s nominal income and real income change in 2018 compared to 2017? a Nominal income decreased and real income decreased. b Nominal income decreased and real income did not change. c Nominal income increased and real income decreased. d Nominal income increased and real income increased. 4 Which of the following is true regarding prices in an economy? a An increase in the price level is called inflation. b An increase in the price level is called deflation. c Disinflation means that the inflation rate is negative. d Deflation and disinflation mean the same thing. 5 If your nominal wage doubles at the same time as prices double, your real wage will a Increase b Decrease c Not change d Double 6 Assume that the price level in 2000 was 250 and the price level in the next year was 275. What is the inflation rate between these two years? a 5% b 10% c 25% d 50% 7 What is the value of the consumer price index (CPI) in the base year? a 0 b 1 c 100 d 200 8 Which of the following is a reason that the consumer price index (CPI) overstates the true rate of inflation? a The CPI ignores changes in the quality of products. b The CPI assumes that consumers will switch to cheaper products when prices rise. c The market basket is frequently updated with new products. d The government frequently lies about the inflation rate. 9 Analyze the table. What is the price of the market basket in 2023? a $8 b $10 c $20 d $24 10 Analyze the table. What is the value of the consumer price index (CPI) in 2023? a 1 b 3 c 300 d 100 11 What is the inflation rate? a The percentage change in prices b The overall level of prices c The cause of most recessions d The rate of growth in GDP 12 What is the price level? a The total number of unemployed workers b An index that measures the prices of stocks c The price of a single good or service d The overall level of prices

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Study Game - Topic 2.4

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Study Game - Topic 2.4Versión en línea

por Zachary Foust

The table shows the cost of the same representative basket of goods in the base year 2012 and in 2013, and the average weekly nominal wage rate in 2012 and 2013. If 2012 is the base year, which of the following is true?

Which of the following explains why the rate of change of the consumer price index (CPI) tends to overstate the actual inflation rate?

In 2017 Sabrina earned an annual salary of $100,000 as an engineer. In 2018, her income rose to $105,000. The inflation rate in 2018 was 2%. How did Sabrina’s nominal income and real income change in 2018 compared to 2017?

Which of the following is true regarding prices in an economy?

If your nominal wage doubles at the same time as prices double, your real wage will

Assume that the price level in 2000 was 250 and the price level in the next year was 275. What is the inflation rate between these two years?

What is the value of the consumer price index (CPI) in the base year?

Which of the following is a reason that the consumer price index (CPI) overstates the true rate of inflation?

Analyze the table. What is the price of the market basket in 2023?

Analyze the table. What is the value of the consumer price index (CPI) in 2023?

What is the inflation rate?

What is the price level?