Question 1

If the Consumer Price Index was 90 in one year and 100 in the following year, then the rate of inflation was about

Accepted Answer

The answer of If the Consumer Price Index was 90...

Question 2

Which of the following statistics can turn negative?

Accepted Answer

Inflation rate can turn negative, indicating deflation, which is a decrease in the general price level of goods and services.

Question 3

The inflation rate measures the percentage growth rate of

Accepted Answer

The inflation rate measures the percentage change in the Consumer Price Index (CPI) from one year to the next, indicating how much prices have increased over that period.

Question 4

Inflation rates in the United States reached double-digit rates in the

Accepted Answer

Inflation rates in the United States reached double-digit levels during the 1970s, particularly due to the oil crises and other economic factors.

Question 5

Which measure of inflation would include consumer goods and capital goods?

Accepted Answer

The GDP Price Index measures the prices of all goods and services included in GDP, which encompasses both consumer goods and capital goods.

Question 6

If the Consumer Price Index was 125 in one year and 120 in the following year, then the rate of inflation was approximately

Accepted Answer

The rate of inflation is calculated as ((CPI in the following year - CPI in the previous year) / CPI in the previous year) * 100. Here, it is ((120 - 125) / 125) * 100 = -4.0 percent.

Question 7

If the Consumer Price Index for a certain year is 120, this means that the average price of consumer items in that year was

Accepted Answer

The Consumer Price Index (CPI) measures changes in the price level of a weighted average market basket of consumer goods and services purchased by households. A CPI of 120 means that the average price level is 20 percent higher than during the base period (often 1982-84 for the U.S. CPI), not 120 percent higher, not a specific dollar amount per basket, and not necessarily compared to the preceding year unless that year is the base period.

Question 8

Unemployment rates for skilled workers compared to unemployment rates for unskilled workers are

Accepted Answer

Skilled workers tend to be employed in less cyclically vulnerable industries, such as the services and nondurable goods industries. This means that they are less likely to be affected by economic downturns and therefore have lower unemployment rates compared to unskilled workers.

Question 9

Which of the following measures the changes in the prices of a "market basket" of some 300 goods and services purchased by typical urban consumers?

Accepted Answer

The Consumer Price Index (CPI) measures the changes in prices of a "market basket" of some 300 goods and services that typical urban consumers buy, including food, housing, transportation, and medical care. It is a widely used measure of inflation in the economy.

Question 10

When inflation occurs,

Accepted Answer

Inflation leads to a decrease in the purchasing power of money, meaning each unit of currency buys fewer goods and services than before.

Question 11

The CPI compiled by the Bureau of Labor Statistics is used in the computations for

Accepted Answer

The Consumer Price Index (CPI) is primarily used to measure inflation by tracking changes in the price level of a basket of consumer goods and services over time.

Question 12

Inflation is a rise in

Accepted Answer

Inflation refers to the increase in the general level of prices for goods and services over a period of time, leading to a decrease in the purchasing power of money.

Question 13

Unemployment rates in the United States from 2005 to 2015 were in the range of

Accepted Answer

The unemployment rate in the United States from 2005 to 2015 ranged from a low of 4.4% in 2006-2007 to a high of 9.9% in 2009 during the Great Recession.

Question 14

Over a 10-year period, the Consumer Price Index doubled.On the basis of this information and using the rule of 70, we can say that the average annual rate of inflation over this period was approximately

Accepted Answer

The rule of 70 states that to find the doubling time of an investment or inflation rate, you divide 70 by the annual growth rate. Here, 70 divided by 10 years gives an approximate annual inflation rate of 7 percent.

Question 15

The economy has an annual inflation rate of 3.5 percent.It will take approximately how many years for the price level to double?

Accepted Answer

Using the Rule of 70, which is a way to estimate the number of years it takes for a quantity to double, you divide 70 by the annual growth rate. Here, 70 / 3.5 = 20 years.

Question 16

"Depression means idleness.And idleness means loss of skills, loss of self-respect, plummeting morale, family disintegration, and sociopolitical unrest." This quote describes some of the

Accepted Answer

The quote describes the noneconomic costs of unemployment, such as loss of skills, self-respect, morale, family disintegration, and sociopolitical unrest.

Question 17

Inflation caused by an increase in aggregate spending is referred to as

Accepted Answer

Demand-pull inflation occurs when aggregate demand in an economy outpaces aggregate supply, leading to an increase in prices.

Question 18

Inflation rates in the United States from 2005 to 2015 were within the range of about

Accepted Answer

During the period from 2005 to 2015, inflation rates in the United States generally ranged from 0 percent to 4 percent, with some fluctuations due to economic conditions such as the financial crisis in 2008.

Question 19

If the Consumer Price Index was 170 in one year and 180 in the next year, then the rate of inflation was approximately

Accepted Answer

The rate of inflation is calculated as ((180 - 170) / 170) * 100 = 5.88%, which rounds to approximately 5.9%.

Question 20

Which of the following countries experienced deflation for several years in the period 2002-2015?

Accepted Answer

Japan experienced deflation during this period, characterized by falling prices and stagnant economic growth.

Quiz 29: Business Cycles, Unemployment, and Inflation