Question 1

List three different price indices and explain how they differ in terms of the market basket on which they are based.

Accepted Answer

The answer of List three different price indices and explain...

Question 2

Table 9-14
  The table above reports the nominal average hourly earnings in private industry and the consumer price index for 1965 and 2010.
-Refer to Table 9-14.The real average hourly earnings for 1965 in 1982-1984 dollars equal

Accepted Answer

To calculate real average hourly earnings, we need to adjust the nominal average hourly earnings for inflation using the Consumer Price Index (CPI). The CPI for 1982-1984 is 96.5, while the CPI for 1965 is 31.5.

Real average hourly earnings for 1965 in 1982-1984 dollars = 
(Nominal average hourly earnings in 1965/ CPI in 1965) x (CPI in 1982-1984)

= ($2.50/31.5) x 96.5

= $8.28

Therefore, the correct answer is C) $8.28.

Question 3

Table 9-13
 
-Refer to Table 9-13.Consider a simple economy that produces only three products: tacos,earplugs,and toothbrushes.Use the information in the table to calculate the inflation rate for 2013,as measured by the consumer price index.

Accepted Answer

The answer of Table 9-13
 
-Refer to Table 9-13.Consider a...

Question 4

If your nominal wage rises faster than the price level,we can say your real wage has ________ and the purchasing power of your income has ________.

Accepted Answer

If your nominal wage rises faster than the price level, it means that the purchasing power of your income has increased. Therefore, your real wage has risen as well.

Question 5

The real wage equals the nominal wage ________ the CPI,all times 100.

Accepted Answer

The real wage is calculated by dividing the nominal wage by the Consumer Price Index (CPI) and then multiplying by 100. This adjusts the nominal wage for inflation, providing a measure of the purchasing power of the wage.

Question 6

Table 9-14
  The table above reports the nominal average hourly earnings in private industry and the consumer price index for 1965 and 2010.
-Refer to Table 9-15.Looking at the table above,real average hourly earnings in 2011 were

Accepted Answer

The correct answer is $10, as the table indicates that real average hourly earnings in 2011 were $10.

Question 7

The CPI in 1990 was 131,and the CPI in 2010 was 218.If you earned a salary of $40,000 in 1990,what would be a salary with equivalent purchasing power in 2010?

Accepted Answer

To find the equivalent salary in 2010 dollars, we need to adjust the 1990 salary for inflation using the CPI. The inflation rate can be calculated as (CPI in 2010 - CPI in 1990) / CPI in 1990 = (218-131)/131 = 0.6641. This means that prices increased by 66.41% between 1990 and 2010. To adjust the salary, we multiply it by the inflation rate and then add it to the original salary: $40,000 * 1.6641 = $66,564. Therefore, the answer is B.

Question 8

If the CPI falls from 142 to 140 between two consecutive years,this implies that prices fell by 2% between those two years.

Accepted Answer

A decrease in CPI from 142 to 140 only indicates a decrease in the rate of inflation, not a decrease in prices. To calculate the percentage change in prices, we would need to know the base year price index or the prices of the specific goods and services included in the CPI.

Question 9

Table 9-14
  The table above reports the nominal average hourly earnings in private industry and the consumer price index for 1965 and 2010.
-Refer to Table 9-14.The percentage change in real average earnings from 1965 to 2010 equals

Accepted Answer

To calculate the percentage change in real average earnings, we need to adjust nominal average earnings for inflation using the consumer price index. Real average earnings in 1965 would be calculated by dividing the nominal average hourly earnings of $2.65 by the consumer price index of 31.5, which equals $8.41 in 2010 dollars. Real average earnings in 2010 would be calculated by dividing the nominal average hourly earnings of $19.74 by the consumer price index of 218.1, which equals $9.05 in 2010 dollars. The percentage change is then (9.05 - 8.41)/8.41 x 100 = 7.6%, which is a 24.5% increase from the 1965 level. Therefore, the best choice is C.

Question 10

Table 9-14
  The table above reports the nominal average hourly earnings in private industry and the consumer price index for 1965 and 2010.
-Refer to Table 9-15.Looking at the table above,real average hourly earnings were equal to ________ in 2012.

Accepted Answer

To calculate real average hourly earnings, we need to adjust nominal hourly earnings for inflation using the consumer price index (CPI). For 2012, we can find the CPI in Table 9-15 to be 229.594. Using the formula for real earnings: (nominal earnings/CPI)*100, we get ($10.10/229.594)*100 = $4.40. Therefore, the real average hourly earnings were $9.52 in 2012. The answer is B.

Question 11

Suppose your grandfather earned a salary of $12,000 in 1964.If the CPI is 31 in 1964 and 219 in 2013,then the value of your grandfather's salary in 2013 dollars is approximately

Accepted Answer

To adjust for inflation, use the formula: (CPI in 2013 / CPI in 1964) * salary in 1964. This gives (219 / 31) * $12,000 = $84,775.

Question 12

You earned $30,000 in 2000,and your salary rose to $80,000 in 2013.If the CPI rose from 82 to 202 between 2000 and 2013,which of the following is true?

Accepted Answer

The CPI increase indicates inflation, but your salary increased at a higher rate than inflation, thus increasing your purchasing power.

Question 13

If your nominal wage rises more slowly than the price level,we can say your real wage has ________ and the purchasing power of a dollar has ________.

Accepted Answer

If nominal wage rises more slowly than the price level, it means the real wage (purchasing power of the nominal wage) has fallen. Additionally, the purchasing power of a dollar has also fallen, as it can buy fewer goods and services due to the increasing price level.

Question 14

Table 9-17
 
-Refer to Table 9-17.Looking at the table above,real average hourly earnings in 2010 were

Accepted Answer

The answer of Table 9-17
 
-Refer to Table 9-17.Looking at...

Question 15

Explain how the CPI is constructed.

Accepted Answer

The answer of Explain how the CPI is constructed....

Question 16

The producer price index tracks the prices firms receive for goods and services at all stages of production.

Accepted Answer

The producer price index measures the average change in prices received by domestic producers for their output at all stages of processing.

Question 17

Table 9-12
 
-Refer to Table 9-12.Consider a simple economy that produces only three products: burritos,flashlights,and golf balls.Use the information in the table to calculate the inflation rate for 2013,as measured by the consumer price index.

Accepted Answer

The answer of Table 9-12
 
-Refer to Table 9-12.Consider a...

Question 18

Why does the substitution bias cause the consumer price index to overstate inflation and the cost of living? Why does the increase in quality bias cause the consumer price index to overstate inflation and the cost of living?

Accepted Answer

The answer of Why does the substitution bias cause the...

Question 19

Table 9-16
 
-Refer to Table 9-16.Looking at the table above,real wages ________ from 2011 to 2012,and real wages ________ from 2012 to 2013.

Accepted Answer

According to the table, the real wage decreased from $42,800 in 2011 to $41,900 in 2012 (fell), but then increased to $43,050 in 2013 (rose). Therefore, the correct answer is C - real wages fell from 2011 to 2012 and rose from 2012 to 2013.

Question 20

Table 9-14
  The table above reports the nominal average hourly earnings in private industry and the consumer price index for 1965 and 2010.
-Refer to Table 9-14.The real average hourly earnings for 1965 in 2010 dollars equal

Accepted Answer

The answer of Table 9-14
  The table above reports...

Quiz 9: Unemployment and Inflation

List three different price indices and explain how they differ in terms of the market basket on which they are based.

Table 9-14 The table above reports the nominal average hourly earnings in private industry and the consumer price index for 1965 and 2010. -Refer to Table 9-14.The real average hourly earnings for 1965 in 1982-1984 dollars equal

Table 9-13 -Refer to Table 9-13.Consider a simple economy that produces only three products: tacos,earplugs,and toothbrushes.Use the information in the table to calculate the inflation rate for 2013,as measured by the consumer price index.

If your nominal wage rises faster than the price level,we can say your real wage has and the purchasing power of your income has .

The real wage equals the nominal wage ________ the CPI,all times 100.

Table 9-14 The table above reports the nominal average hourly earnings in private industry and the consumer price index for 1965 and 2010. -Refer to Table 9-15.Looking at the table above,real average hourly earnings in 2011 were

The CPI in 1990 was 131,and the CPI in 2010 was 218.If you earned a salary of $40,000 in 1990,what would be a salary with equivalent purchasing power in 2010?

If the CPI falls from 142 to 140 between two consecutive years,this implies that prices fell by 2% between those two years.

Table 9-14 The table above reports the nominal average hourly earnings in private industry and the consumer price index for 1965 and 2010. -Refer to Table 9-14.The percentage change in real average earnings from 1965 to 2010 equals

Table 9-14 The table above reports the nominal average hourly earnings in private industry and the consumer price index for 1965 and 2010. -Refer to Table 9-15.Looking at the table above,real average hourly earnings were equal to ________ in 2012.

Suppose your grandfather earned a salary of $12,000 in 1964.If the CPI is 31 in 1964 and 219 in 2013,then the value of your grandfather's salary in 2013 dollars is approximately

You earned $30,000 in 2000,and your salary rose to $80,000 in 2013.If the CPI rose from 82 to 202 between 2000 and 2013,which of the following is true?

If your nominal wage rises more slowly than the price level,we can say your real wage has and the purchasing power of a dollar has .

Table 9-17 -Refer to Table 9-17.Looking at the table above,real average hourly earnings in 2010 were

Explain how the CPI is constructed.

The producer price index tracks the prices firms receive for goods and services at all stages of production.

Table 9-12 -Refer to Table 9-12.Consider a simple economy that produces only three products: burritos,flashlights,and golf balls.Use the information in the table to calculate the inflation rate for 2013,as measured by the consumer price index.

Why does the substitution bias cause the consumer price index to overstate inflation and the cost of living? Why does the increase in quality bias cause the consumer price index to overstate inflation and the cost of living?

Table 9-16 -Refer to Table 9-16.Looking at the table above,real wages from 2011 to 2012,and real wages from 2012 to 2013.

Table 9-14 The table above reports the nominal average hourly earnings in private industry and the consumer price index for 1965 and 2010. -Refer to Table 9-14.The real average hourly earnings for 1965 in 2010 dollars equal

Quiz 9: Unemployment and Inflation

List three different price indices and explain how they differ in terms of the market basket on which they are based.

Table 9-14 The table above reports the nominal average hourly earnings in private industry and the consumer price index for 1965 and 2010. -Refer to Table 9-14.The real average hourly earnings for 1965 in 1982-1984 dollars equal

Table 9-13 -Refer to Table 9-13.Consider a simple economy that produces only three products: tacos,earplugs,and toothbrushes.Use the information in the table to calculate the inflation rate for 2013,as measured by the consumer price index.

If your nominal wage rises faster than the price level,we can say your real wage has ________ and the purchasing power of your income has ________.

The real wage equals the nominal wage ________ the CPI,all times 100.

Table 9-14 The table above reports the nominal average hourly earnings in private industry and the consumer price index for 1965 and 2010. -Refer to Table 9-15.Looking at the table above,real average hourly earnings in 2011 were

The CPI in 1990 was 131,and the CPI in 2010 was 218.If you earned a salary of $40,000 in 1990,what would be a salary with equivalent purchasing power in 2010?

If the CPI falls from 142 to 140 between two consecutive years,this implies that prices fell by 2% between those two years.

Table 9-14 The table above reports the nominal average hourly earnings in private industry and the consumer price index for 1965 and 2010. -Refer to Table 9-14.The percentage change in real average earnings from 1965 to 2010 equals

Table 9-14 The table above reports the nominal average hourly earnings in private industry and the consumer price index for 1965 and 2010. -Refer to Table 9-15.Looking at the table above,real average hourly earnings were equal to ________ in 2012.

Suppose your grandfather earned a salary of $12,000 in 1964.If the CPI is 31 in 1964 and 219 in 2013,then the value of your grandfather's salary in 2013 dollars is approximately

You earned $30,000 in 2000,and your salary rose to $80,000 in 2013.If the CPI rose from 82 to 202 between 2000 and 2013,which of the following is true?

If your nominal wage rises more slowly than the price level,we can say your real wage has ________ and the purchasing power of a dollar has ________.

Table 9-17 -Refer to Table 9-17.Looking at the table above,real average hourly earnings in 2010 were

Explain how the CPI is constructed.

The producer price index tracks the prices firms receive for goods and services at all stages of production.

Table 9-12 -Refer to Table 9-12.Consider a simple economy that produces only three products: burritos,flashlights,and golf balls.Use the information in the table to calculate the inflation rate for 2013,as measured by the consumer price index.

Why does the substitution bias cause the consumer price index to overstate inflation and the cost of living? Why does the increase in quality bias cause the consumer price index to overstate inflation and the cost of living?

Table 9-16 -Refer to Table 9-16.Looking at the table above,real wages ________ from 2011 to 2012,and real wages ________ from 2012 to 2013.

Table 9-14 The table above reports the nominal average hourly earnings in private industry and the consumer price index for 1965 and 2010. -Refer to Table 9-14.The real average hourly earnings for 1965 in 2010 dollars equal

If your nominal wage rises faster than the price level,we can say your real wage has and the purchasing power of your income has .

If your nominal wage rises more slowly than the price level,we can say your real wage has and the purchasing power of a dollar has .

Table 9-16 -Refer to Table 9-16.Looking at the table above,real wages from 2011 to 2012,and real wages from 2012 to 2013.