Question 1

Table 13-9
 
-Refer to Table 13-9.Looking at the table above,real average hourly earnings in 2009 were

Accepted Answer

The answer of Table 13-9
 
-Refer to Table 13-9.Looking at...

Question 2

The nominal interest rate equals the real interest rate ________ the inflation rate.

Accepted Answer

The nominal interest rate is equal to the real interest rate plus the inflation rate. This is because the nominal interest rate includes both the real interest rate (the return on investment after adjusting for inflation) and the inflation rate (the rate at which prices are increasing). Therefore, choice C (plus) is the correct answer.

Question 3

Housing is the largest component of the U.S.CPI market basket.

Accepted Answer

Housing accounts for approximately 42% of the CPI market basket, making it the largest component.

Question 4

Table 13-10
  Salaries in major league baseball have soared over the last 30 to 40 years.Some of the salary increase is due to inflation.The table above reports the consumer price index and the median nominal salary of the New York Yankees for 1989 and 2009.
Source: USA Today Salaries Database,asp.usatoday.com/sports/baseball/salaries/default.aspx
-Refer to Table 13-10.Calculate the real median salary of the New York Yankees in both 1982-1984 dollars and 2009 dollars.Calculate the percentage increase in the median salary of the Yankees from 1989 to 2009 in both nominal terms and in real terms.

Accepted Answer

The answer of Table 13-10
  Salaries in major league...

Question 5

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 6

You earned $30,000 in 1990,and your salary rose to $80,000 in 2011.If the CPI rose from 82 to 202 between 1990 and 2011,which of the following is true?

Accepted Answer

The answer of You earned $30,000 in 1990,and your salary...

Question 7

Suppose your grandfather earned a salary of $12,000 in 1964.If the CPI is 31 in 1964 and 219 in 2010,then the value of your grandfather's salary in 2010 dollars is approximately

Accepted Answer

The answer of Suppose your grandfather earned a salary of...

Question 8

Table 13-8
  The table above reports the nominal average hourly earnings in private industry and the consumer price index for 1965 and 2010.
-Refer to Table 13-8.The real average hourly earnings for 1965 in 1982-1984 dollars equal

Accepted Answer

To calculate the real average hourly earnings in 1982-1984 dollars for 1965, we need to use the formula:
Real earnings = (Nominal earnings / Price index) x 100
Substituting the values from the table, we get:
Real earnings for 1965 = (2.82 / 31.5) x 100 = 8.28 (in 1982-1984 dollars)
Therefore, the correct answer is C.

Question 9

Table 13-9
 
-Refer to Table 13-9.Looking at the table above,real average hourly earnings were equal to ________ in 2010.

Accepted Answer

The correct answer is $9.52, as it is the value given for real average hourly earnings in 2010 according to the table referenced.

Question 10

Currently,the base year for the CPI is the average of prices in the years 1982 to 1984.

Accepted Answer

This is true. The base year for the CPI (Consumer Price Index) is currently the average of prices in the years 1982 to 1984. This allows for comparisons of price changes over time in various goods and services. However, the base year has been updated in the past, and may be updated again in the future to reflect changes in the economy and consumption patterns.

Question 11

The inflation rate measures the average prices of goods and services in the economy.

Accepted Answer

The answer of The inflation rate measures the average prices...

Question 12

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 13

Table 13-11
  Source: Energy Information Administration
-Refer to Table 13-11.The table above reports the consumer price index and the average U.S.retail price for unleaded regular gasoline for four different periods since 1976.Note that the gasoline prices are in cents per gallon.
Calculate the real average retail price of unleaded regular gasoline in 1982-1984 dollars.In which period were gasoline prices the highest in real terms? Also,calculate the real average retail price of unleaded regular gasoline in 2011 dollars.

Accepted Answer

The answer of Table 13-11
  Source: Energy Information Administration
-Refer...

Question 14

Table 13-7
 
-Refer to Table 13-7.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 2010,as measured by the consumer price index.

Accepted Answer

The answer of Table 13-7
 
-Refer to Table 13-7.Consider a...

Question 15

Table 13-8
  The table above reports the nominal average hourly earnings in private industry and the consumer price index for 1965 and 2010.
-Refer to Table 13-8.The real average hourly earnings for 1965 in 2010 dollars equal

Accepted Answer

The answer of Table 13-8
  The table above reports...

Question 16

Table 13-8
  The table above reports the nominal average hourly earnings in private industry and the consumer price index for 1965 and 2010.
-Refer to Table 13-8.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 the nominal average hourly earnings for inflation using the CPI. The formula is: 
Real average earnings = (Nominal average earnings/CPI) x 100 
For 1965: 
Real average earnings = (1.60/31.5) x 100 = 5.08 
For 2010: 
Real average earnings = (19.00/218.1) x 100 = 8.72 
The percentage change in real average earnings = ((8.72-5.08)/5.08) x 100 = 71.85% 
Therefore, the answer is C) 24.5 percent.

Question 17

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 18

The real interest rate equals the nominal interest rate ________ the inflation rate.

Accepted Answer

The real interest rate is the nominal interest rate adjusted for inflation, therefore it is calculated by subtracting the inflation rate from the nominal interest rate.

Question 19

The GDP deflator is the best measure that reflects the prices of goods and services purchased by the typical household.

Accepted Answer

The GDP deflator is a measure of the overall price level in an economy, including prices of goods and services purchased by households, businesses, and the government. However, it may not accurately reflect the prices paid by a typical household, as consumption patterns vary across different income groups and regions. The Consumer Price Index (CPI) is a better measure for reflecting the prices of goods and services typically purchased by households.

Question 20

Nominal income is equal to real income if the CPI is less than 100.

Accepted Answer

Nominal income is not equal to real income if the CPI is less than 100. Real income is calculated by adjusting nominal income based on the CPI, so if the CPI is less than 100, the real income will be higher than the nominal income.

Quiz 13: Unemployment and Inflation

Table 13-9 -Refer to Table 13-9.Looking at the table above,real average hourly earnings in 2009 were

The nominal interest rate equals the real interest rate ________ the inflation rate.

Housing is the largest component of the U.S.CPI market basket.

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 .

You earned $30,000 in 1990,and your salary rose to $80,000 in 2011.If the CPI rose from 82 to 202 between 1990 and 2011,which of the following is true?

Suppose your grandfather earned a salary of $12,000 in 1964.If the CPI is 31 in 1964 and 219 in 2010,then the value of your grandfather's salary in 2010 dollars is approximately

Table 13-8 The table above reports the nominal average hourly earnings in private industry and the consumer price index for 1965 and 2010. -Refer to Table 13-8.The real average hourly earnings for 1965 in 1982-1984 dollars equal

Table 13-9 -Refer to Table 13-9.Looking at the table above,real average hourly earnings were equal to ________ in 2010.