Question 1

Assume tuition at the University of Virginia cost $2,962 (per semester)in 2004 and $11,584 in 2012.If the price index was 184 in 2004 and 226 in 2012,then we could say

Accepted Answer

We can calculate the percentage increase in tuition using the price index:
Percentage increase = [(New price index - Old price index) / Old price index] x 100
= [(226 - 184) / 184] x 100
= 23.91%
So tuition has increased by almost 24%, which is much more rapid than the increase in inflation (which is approximately 22%). Therefore, the answer is B.

Question 2

Refer to the following table to answer the following questions: 
-As presented in the table,the rate of inflation (or deflation)from 2002-2003 was (rounded to two decimal places)

Accepted Answer

To find the rate of inflation (or deflation), we need to calculate the percentage change from 2002 to 2003. We can use the formula: 
[(Final value - Initial value) / Initial value] x 100

Using the information from the table:
[(94 - 90) / 90] x 100 = 4.44% (rounded to two decimal places)

However, since prices increased (inflation), we need to subtract this percentage change from 100% to get the inflation rate:
100% - 4.44% = 95.56% = 3.57% (rounded to two decimal places)

Therefore, the rate of inflation (or deflation) from 2002-2003 was 3.57% (option E).

Question 3

Donna Newton made $0.30 per hour in 1946 at a small restaurant in Clearfield,Pennsylvania.If the consumer price index (CPI)was 18.3 in 1946 and 202.4 in 2011,then Donna's inflation-adjusted wage would be

Accepted Answer

To adjust for inflation, use the formula: (Old Wage) * (CPI in New Year / CPI in Old Year). So, $0.30 * (202.4 / 18.3) = $3.32.

Question 4

To convert a current price of a product to its price in the past,we would take the current price of a product and

Accepted Answer

To convert a current price to its past price, you multiply by the ratio of the previous price index to the current price index. This adjusts the current price to reflect the price level of the past.

Question 5

The ratio (Price Level in Earlier Time)/ (Price Level Today)would be used to

Accepted Answer

The answer of The ratio (Price Level in Earlier Time)/...

Question 6

If the price index in 1922 was 17 and a unit of Nabisco Oreo cookies cost $0.32,and if the price index today is 220 and a unit of Nabisco Oreo cookies costs $2.99,then the inflation-adjusted price of Oreos today is

Accepted Answer

The answer of If the price index in 1922 was...

Question 7

According to the textbook,the fully completed house that one could buy from the Sears catalog in 1924 would be

Accepted Answer

Sears catalog homes in 1924 were known for being affordable and of good quality, making them a good deal even when adjusting for inflation compared to today's housing prices.

Question 8

Donna Newton made $0.30 per hour in 1946 at a small restaurant in Clearfield,Pennsylvania.If the consumer price index (CPI)was 18.3 in 1946 and 202.4 in 2011 and the legal minimum wage in 2011 was $7.25,then

Accepted Answer

To find Donna's inflation-adjusted wage in 2011, we use the formula: (1946 wage) * (CPI in 2011 / CPI in 1946). This gives $0.30 * (202.4 / 18.3) = $3.32, which is less than the 2011 minimum wage of $7.25.

Question 9

Refer to the following table to answer the following questions: 
-As presented in the table,the rate of inflation (or deflation)from 2001-2002 was (rounded to two decimal places)

Accepted Answer

To calculate the rate of inflation from 2001-2002, we use the formula (CPI in 2002 - CPI in 2001) / CPI in 2001 * 100. Plugging in the values from the table, we get (120.7 - 113.1) / 113.1 * 100 = 6.67%. Therefore, the answer is D.

Question 10

If the value of the consumer price index (CPI)in 2013 was 135 and the value of the CPI in 2012 was 117,we could correctly say that the

Accepted Answer

The percentage increase in the CPI from 2012 to 2013 can be calculated as [(135-117)/117]*100 = 15.38%, which is closest to 15.4%. Therefore, we could correctly say that the typical basket of goods was about 15.4% more expensive in 2013 than in 2012. Choices A and B are incorrect as they suggest a percentage change of 18%, whereas the actual change is slightly lower. Choices D and E are also incorrect as they refer to the average price of all items included in GDP, which is not the same as the CPI.

Question 11

The price of a McDonald's hamburger in 1955 was $0.15 when the price index was 27; if in 2011 it was $0.89 when the price index was 220,then adjusted for inflation,the price of a McDonald's hamburger in 2011 was

Accepted Answer

The answer of The price of a McDonald's hamburger in...

Question 12

If a Hershey's chocolate bar cost $0.05 in 1921 when the price index was 18 and the same size and weight Hershey's chocolate bar cost $0.05 in 1955 when the price index was 27,then

Accepted Answer

The fact that the price of the Hershey's chocolate bar remained the same between 1921 and 1955 suggests that the price level did not change significantly during this time period. However, the increase in the price index from 18 to 27 suggests that overall prices did rise during this period. Therefore, the inflation-adjusted price of the Hershey's chocolate bar would be lower in 1955 than in 1921.

Question 13

In 1940 you could buy a "nickel Pepsi" for (oddly enough)a nickel.If the price index in 1940 was 14 and the 2011 price index was 221,then the inflation-adjusted price of a Pepsi would be

Accepted Answer

To adjust for inflation, use the formula: (Price in 1940) * (Price Index in 2011 / Price Index in 1940). So, $0.05 * (221 / 14) = $0.79.

Question 14

Let's say a bottle of Dr.Wells (an actual soft drink still available but hard to obtain)cost $0.15 in 1970.If the consumer price index (CPI)in 1970 was 37.8 and the current CPI is 240,then the inflation-adjusted price of Dr.Wells would be (rounded to the nearest penny)

Accepted Answer

To adjust for inflation, we need to use the formula:
Adjusted Price = (Price in Base Year) x (Current CPI / Base Year CPI)
Using the given information, we have:
Adjusted Price = $0.15 x (240/37.8) = $0.95
Therefore, the inflation-adjusted price of Dr. Wells is $0.95, which is closest to answer choice D.

Question 15

How do you convert a price of a good from an earlier time into today's price?

Accepted Answer

The most commonly used method to convert a price of a good from an earlier time into today's price is to multiply the earlier price by the ratio of today's consumer price index (CPI) to the earlier CPI. This takes into account inflation and the change in the value of money over time. Therefore, the correct choice is D.

Question 16

Assume tuition and fees at North Carolina State University cost $4,259 in 2004 and $7,787 in 2012.If the price index was 184 in 2004 and 226 in 2012,then we could say

Accepted Answer

To determine the real change in tuition over time, we need to adjust for inflation using the price index. We can do this using the following formula:

Real tuition = Nominal tuition / Price index * 100

For 2004: 
Real tuition = $4,259 / 184 * 100 = $2,314.30

For 2012: 
Real tuition = $7,787 / 226 * 100 = $3,445.58

This means that in real terms, tuition at North Carolina State University increased from $2,314.30 to $3,445.58 between 2004 and 2012. Thus, the real increase in tuition is about 49% (rounded to two decimal places).

Since the price index increased by about 22% over this time period (226/184 * 100 = 122.83), we can see that tuition has increased more rapidly than inflation. Therefore, the correct answer is B.

Question 17

Assume the price of salt increased from $0.30 in 1985 to $0.50 in 1995.If we calculate the average rate of price increase for salt over this period,we could accurately say the

Accepted Answer

To calculate the average rate of price increase, we need to find the difference between the two prices and divide by the original price, then divide that result by the number of years between the two prices. 
($0.50-$0.30)/$0.30 = $0.20/$0.30 = 0.67. This means that the price increased by 67% over the 10-year period. 
To find the average rate of increase per year, we divide 0.67 by 10: 0.67/10 = 0.067 or 6.7%. Therefore, the price of salt increased at about a 5% rate per year during this period. 
Choice A is incorrect because it assumes that the 40% increase is a yearly rate. 
Choice B is incorrect because it assumes that the 20% increase is a yearly rate. 
Choice C is incorrect because it only calculates the percentage increase, not the rate of increase per year. 
Choice E may be true, but it is not directly related to the question asked.

Question 18

Assume tuition at Penn State cost $6,142 (per semester)in 2007 and $7,562 in 2012.If the price index was 207.34 in 2007 and 226 in 2012,then we could say tuition

Accepted Answer

The price index increased from 207.34 to 226 between 2007 and 2012, indicating an inflation rate of approximately 9%. Meanwhile, the tuition increased from $6,142 to $7,562, which is an increase of approximately 23%. Therefore, tuition has increased at a faster rate than inflation.

Question 19

Assume tuition at Houston Community College cost $588 (per semester)in 2004 and $813 in 2012.If the price index was 184 in 2004 and 226 in 2012,then we could say

Accepted Answer

We can calculate the inflation rate from 2004 to 2012 as follows:

Inflation rate = ((Price index in 2012 - Price index in 2004) ÷ Price index in 2004) x 100%
Inflation rate = ((226 - 184) ÷ 184) x 100%
Inflation rate = 22.83%

Therefore, prices overall increased by 22.83% from 2004 to 2012. Since tuition at Houston Community College increased by a greater percentage (38.1%), we can conclude that tuition has increased more rapidly than inflation.

Question 20

If mustard now costs $0.75 when today's price index is 225,and if the price index in 1970 was 38,we would most accurately say that

Accepted Answer

The answer of If mustard now costs $0.75 when today's...

Quiz 21: The Price Level and Inflation

Assume tuition at the University of Virginia cost $2,962 (per semester) in 2004 and $11,584 in 2012.If the price index was 184 in 2004 and 226 in 2012,then we could say

Refer to the following table to answer the following questions: -As presented in the table,the rate of inflation (or deflation) from 2002-2003 was (rounded to two decimal places)

Donna Newton made $0.30 per hour in 1946 at a small restaurant in Clearfield,Pennsylvania.If the consumer price index (CPI) was 18.3 in 1946 and 202.4 in 2011,then Donna's inflation-adjusted wage would be

To convert a current price of a product to its price in the past,we would take the current price of a product and

The ratio (Price Level in Earlier Time) / (Price Level Today) would be used to

If the price index in 1922 was 17 and a unit of Nabisco Oreo cookies cost $0.32,and if the price index today is 220 and a unit of Nabisco Oreo cookies costs $2.99,then the inflation-adjusted price of Oreos today is

According to the textbook,the fully completed house that one could buy from the Sears catalog in 1924 would be

Donna Newton made $0.30 per hour in 1946 at a small restaurant in Clearfield,Pennsylvania.If the consumer price index (CPI) was 18.3 in 1946 and 202.4 in 2011 and the legal minimum wage in 2011 was $7.25,then

Refer to the following table to answer the following questions: -As presented in the table,the rate of inflation (or deflation) from 2001-2002 was (rounded to two decimal places)

If the value of the consumer price index (CPI) in 2013 was 135 and the value of the CPI in 2012 was 117,we could correctly say that the

The price of a McDonald's hamburger in 1955 was $0.15 when the price index was 27; if in 2011 it was $0.89 when the price index was 220,then adjusted for inflation,the price of a McDonald's hamburger in 2011 was

If a Hershey's chocolate bar cost $0.05 in 1921 when the price index was 18 and the same size and weight Hershey's chocolate bar cost $0.05 in 1955 when the price index was 27,then

In 1940 you could buy a "nickel Pepsi" for (oddly enough) a nickel.If the price index in 1940 was 14 and the 2011 price index was 221,then the inflation-adjusted price of a Pepsi would be

Let's say a bottle of Dr.Wells (an actual soft drink still available but hard to obtain) cost $0.15 in 1970.If the consumer price index (CPI) in 1970 was 37.8 and the current CPI is 240,then the inflation-adjusted price of Dr.Wells would be (rounded to the nearest penny)

How do you convert a price of a good from an earlier time into today's price?

Assume tuition and fees at North Carolina State University cost $4,259 in 2004 and $7,787 in 2012.If the price index was 184 in 2004 and 226 in 2012,then we could say

Assume the price of salt increased from $0.30 in 1985 to $0.50 in 1995.If we calculate the average rate of price increase for salt over this period,we could accurately say the

Assume tuition at Penn State cost $6,142 (per semester) in 2007 and $7,562 in 2012.If the price index was 207.34 in 2007 and 226 in 2012,then we could say tuition

Assume tuition at Houston Community College cost $588 (per semester) in 2004 and $813 in 2012.If the price index was 184 in 2004 and 226 in 2012,then we could say

If mustard now costs $0.75 when today's price index is 225,and if the price index in 1970 was 38,we would most accurately say that