Question 1

When the CPI rises ________, the inflation rate is ________.

Accepted Answer

When the CPI rises rapidly, it indicates higher prices for goods and services, which results in a high inflation rate.

Question 2

The inflation rate is the

Accepted Answer

The inflation rate is the percentage change in the CPI from one year to the next year. It reflects the increase in the general price level of goods and services in the economy. Choices A and C describe changes in the composition or level of the market basket, but they do not measure inflation directly. Choices D and E also describe changes in the price level, but they are not specific to the CPI or the consumer price index. Therefore, choice B is the best choice for this question.

Question 3

In the current year, the CPI is 122 and during the previous year the CPI was 115. The inflation rate between these years is

Accepted Answer

The formula for calculating the inflation rate is: 
(Inflation rate = (Current year CPI - Previous year CPI) / Previous year CPI) x 100%

Plugging in the given values, we get: 
(Inflation rate = (122 - 115) / 115) x 100%
Inflation rate = 6.09%

Rounding off to one decimal place, we get an inflation rate of 6.1%. Therefore, the answer is B.

Question 4

If in Switzerland in January, 2009 the CPI was 187.4 and in January, 2010 it was 191.1, then the inflation rate in 2010 was

Accepted Answer

The answer of If in Switzerland in January, 2009 the...

Question 5

In the current year, the CPI is 160 and during the previous year the CPI was 181. The inflation rate between these years is

Accepted Answer

The answer of In the current year, the CPI is...

Question 6

Suppose in year 1 the CPI is 90, in year 2 the CPI is 100, and in year 3 the CPI is 110. Then, inflation is

Accepted Answer

The answer of Suppose in year 1 the CPI is...

Question 7

If the CPI this year is 240 and the CPI in the previous year was 200, what is the annual inflation rate?

Accepted Answer

The answer of If the CPI this year is 240...

Question 8

The CPI was 170 last year and is 190 this year. What is the inflation rate between these two years?

Accepted Answer

The answer of The CPI was 170 last year and...

Question 9

A country's CPI was 84.5 last year and 100.0 this year. The inflation rate was

Accepted Answer

The inflation rate can be calculated using the formula: [(Current CPI – Last Year's CPI) / Last Year's CPI] x 100. Plugging in the values, we get [(100-84.5)/84.5] x 100 = 18.3%. Therefore, the correct answer is B.

Question 10

If the CPI decreases from one year to the next, then the inflation rate is

Accepted Answer

If the CPI decreases, it means that the average price level of goods and services has decreased, which indicates deflation. Therefore, the inflation rate is negative.

Question 11

If the CPI is 231.4 in one year and is 241.2 in the next year, then the inflation rate equals

Accepted Answer

The inflation rate is calculated as the percentage change in the CPI from one year to the next. In this case, the CPI increased from 231.4 to 241.2, an increase of 9.8 points. To calculate the inflation rate, we divide the change in the CPI by the original CPI and multiply by 100. Therefore, the inflation rate is $\frac { ( 241.2 - 231.4 ) } { 231.4 }$ × 100 = 4.2%.

Question 12

$$\begin{array} { | l | c | c | c | c | } 
\hline \text { Item } & \begin{array} { c } 
\text { Quantity } \
( 2011 )
\end{array} & \text { Price (2011) } & \begin{array} { c } 
\text { Quantity } \
( 2012 )
\end{array} & \text { Price (2012) } \
\hline \text { Magazines } & 400 & \$ 5.00 & 450 & \$ 4.50 \
\hline \text { Movie tickets } & 50 & \$ 6.00 & 200 & \$ 8.00 \
\hline \text { Pizzas } & 100 & \$ 10.00 & 120 & \$ 10.50 \
\hline
\end{array}$$ 
The data in the table above shows the consumption by families in an economy. The year 2011 is the reference base period.
-Based on the table above, the CPI for 2012 is

Accepted Answer

The answer of \[\begin{array} { | l | c |...

Question 13

A country reports the total expenditures on the fixed CPI basket for the past three years. The cost of the CPI basket in 2010 was $23,000, the cost of the CPI basket for the reference base period, 2011, was $23,805, and the cost of the CPI basket in 2012 was $24,500. The CPI for 2010 is

Accepted Answer

To calculate the CPI, we need to use the reference base period as a baseline. In this case, the reference base period is 2011, and its cost is $23,805. Therefore, to calculate the CPI in 2010, we divide the cost of the CPI basket in 2010 ($23,000) by the cost of the CPI basket in 2011 ($23,805) and then multiply by 100. This gives us a CPI of 96.6.

Question 14

A country reports the total expenditures on the fixed CPI basket for the past three years. The cost of the CPI basket in 2010 was $23,000, the cost of the CPI basket for the reference base period, 2011, was $23,805, and the cost of the CPI basket in 2012 was $24,500. The CPI for 2012 is

Accepted Answer

To find the CPI for 2012, we need to use the reference base period as a starting point.

CPI for 2011 = (Cost of CPI basket in 2011 / Cost of CPI basket in reference base period) x 100
CPI for 2011 = (23,805 / 23,805) x 100 = 100

CPI for 2012 = (Cost of CPI basket in 2012 / Cost of CPI basket in reference base period) x 100
CPI for 2012 = (24,500 / 23,805) x 100 = 102.9

Therefore, the answer is choice C, 102.9.

Question 15

Which of the following formulas is used to calculate the inflation rate?

Accepted Answer

The answer of Which of the following formulas is used...

Question 16

If the price index last year was 100 and today it is 167, what is the inflation rate over this period?

Accepted Answer

The answer of If the price index last year was...

Question 17

$$\begin{array} { | l | c | c | c | c | } 
\hline \text { Item } & \begin{array} { c } 
\text { Quantity } \
( 2011 )
\end{array} & \text { Price (2011) } & \begin{array} { c } 
\text { Quantity } \
( 2012 )
\end{array} & \text { Price (2012) } \
\hline \text { Magazines } & 400 & \$ 5.00 & 450 & \$ 4.50 \
\hline \text { Movie tickets } & 50 & \$ 6.00 & 200 & \$ 8.00 \
\hline \text { Pizzas } & 100 & \$ 10.00 & 120 & \$ 10.50 \
\hline
\end{array}$$ 
The data in the table above shows the consumption by families in an economy. The year 2011 is the reference base period.
-Based on the table above, between 2011 and 2012, the inflation rate in this country was

Accepted Answer

The answer of \[\begin{array} { | l | c |...

Question 18

The inflation rate measures the

Accepted Answer

The inflation rate measures the percentage change in the CPI from one year to the next year. It indicates how much prices have increased over that time period.

Question 19

Suppose a report from the Bureau of Labor Statistics states that the CPI for the year 2012 was 152. What is the percentage point increase in the prices of the goods and services since the reference base period?

Accepted Answer

The answer of Suppose a report from the Bureau of...

Question 20

If the current period has a CPI of 143, then the amount of inflation since the base period is

Accepted Answer

The CPI is a measure of price inflation relative to a base period, which is assigned a CPI of 100. Therefore, an increase in CPI from 100 to 143 represents a 43 percent increase in prices since the base period.

Quiz 16: The Cpi and the Cost of Living

When the CPI rises , the inflation rate is .