Deck 17: Index Numbers

Question 1

A composite price index based on the prices of a group of items is known as the

A)Group price relative
B)Aggregate price index
C)Laspeyres index
D)Paasche index

Answer 1

B

Question 2

The value given to a base-period price is

A)1.00
B)the actual price in the base period
C)100
D)any value larger than 1.00

Answer 2

C

Question 3

A weighted aggregate price index where the weight for each item is its current-period quantity is the

A)Aggregate quantity index
B)Laspeyres index
C)Paasche index
D)Quantity index

Answer 3

C

Question 4

A monthly price index that uses the price changes in consumer goods and services for measuring the changes in consumer prices over time is known as the

A)Paasche Index
B)Consumer Price Index
C)Producer Price Index
D)Laspeyres Index

Question 5

The reason why weights are used in an aggregate index is to

A)insure that all items have an influence on the index which is relative to their respective importance
B)insure that expensive items are considered more heavily
C)insure that current prices will influence the index more than base prices
D)None of these alternatives is correct.

Question 6

Consumer Price Index is

A)a weighted aggregate price index where the weight for each item is its current-period quantity.
B)a weighted aggregate price index where the weight for each item is its last-period quantity.
C)an index that is designed to measure changes in quantities over time.
D)an index that is designed to measure changes in production levels over time.

Question 7

A price index for a given item which is computed by dividing a current unit price by a base-period unit price and multiplying the result by 100 is known as the

A)Producer price index
B)Consumer price index
C)Paasche index
D)Price relative

Question 8

A weighted aggregate price index where the weight for each item is its base-period quantity is known as the

A)Laspeyres index
B)Paasche index
C)Weight index
D)Quantity index

Question 9

The price relative is computed by dividing

A)a base-period unit price by a current unit price and multiplying the result by 100
B)a current unit price by a base-period unit price and multiplying the result by 100
C)a current unit price by a base-period unit price and dividing the result by 100
D)current price by quantity

Question 10

A monthly price index that is designed to measure changes in prices of goods sold in primary markets (i.e. ,first purchase of a commodity in non retail markets)is the

A)Consumer price index
B)Producer price index
C)Dow Jones Average
D)Price relative

Question 11

An index that is designed to measure changes in quantities over time is the

A)Aggregate price index
B)Quantity index
C)Relative quantity index
D)Index of Industries

Question 12

The price relative is a price index that is determined by

A)(price in period t/base period price)(100)
B)(base period price/price in period t)(100)
C)(price in period t + base period price)(100)
D)(price in period t)(100)

Question 13

A quantity index which is designed to measure changes in the physical volume of production levels of industrial goods over time is the

A)Time index
B)Producers index
C)Index of Industrial Production
D)Paasche index

Question 14

The consumer price index is

A)a monthly price index that is designed to measure changes in prices for goods sold in primary markets
B)a quarterly price index that uses 100 as a base
C)a monthly price index that uses the price changes in a market basket of consumer goods and services to measure the changes in consumer prices over time
D)another name for the Paasche index

Question 15

Aggregate price indexes reflecting the prices of stocks listed on the New York Stock Exchange are

A)Stock Exchange indexes
B)Indexes of Industrial Production
C)Producer price indexes
D)Dow Jones averages

Question 16

A Composite price index where the prices of the items in the composite are weighted by their relative importance is called the

A)Price relative
B)Weighted aggregate price index
C)Paasche index
D)Quantity index

Question 17

The Laspeyres index is a weighted aggregate price index where the weight for each item is its

A)current-period quantity
B)base-period price
C)current-period price
D)base-period quantity

Question 18

Dow Jones averages are aggregate price indexes reflecting the prices of stocks listed on the

A)American Stock Exchange
B)NASDAQ Exchange
C)New York Stock Exchange
D)Tokyo Stock Exchange

Question 19

The quantity index is an index that is designed to measure changes in

A)the ratio of quantity divided by price over time
B)the ratio of price divided by quantity over time
C)quantity over time
D)price over time

Question 20

The Paasche index is a weighted aggregate price index where the weight for each item is its

A)current-period price
B)current-period quantity
C)base-period price
D)base-period quantity

Question 21

In 1995 the price of a pound of ground beef was $1.25.By 2010,the price had increased to $2.50.The price relative is

A)50
B)0.5
C)200
D)3.125

Question 22

Exhibit 17-1
You are given the following information about items A,B,C,and D.

Refer to Exhibit 17-1.The price relative for item A in 2010 (use 2005 as the base year)is

A)1.082
B)7
C)92.391
D)108.235

Question 23

An automobile dealership sells 3 different types of automobiles.Unit prices for the years 2005 and 2010 are shown below.

Compute an unweighted aggregate price index for the automobiles.

Question 24

Exhibit 17-4

Refer to Exhibit 17-4.The Laspeyres index in 2010 is (rounded)

A)80.015
B)80.880
C)123.639
D)124.976

Question 25

Exhibit 17-1
You are given the following information about items A,B,C,and D.

Refer to Exhibit 17-1.The weighted aggregate price index in 2010 is

A)1.084
B)92.292
C)108.352
D)109.203

Question 26

The prices of 3 products for the years 2007 and 2010 are shown below.

Compute an unweighted aggregate price index for the products.

Question 27

Exhibit 17-1
You are given the following information about items A,B,C,and D.

Refer to Exhibit 17-1.The unweighted aggregate price index in 2010 is

A)1.092
B)91.573
C)108.352
D)109.203

Question 28

The prices of an item for the years 2005 through 2010 are given below.

Let 2005 be the base and compute the price relatives for the years 2005 through 2010.

Question 29

Exhibit 17-2
You are given the following information about items X,Y,and Z.

Refer to Exhibit 17-2.The unweighted aggregate price index for 2010 is

A)80
B)125
C)1.25
D)0.80

Question 30

Exhibit 17-3
You are given the following information about items A,B,C,and D.

Refer to Exhibit 17-3.The Paasche index in 2010 (rounded)is

A)96.268
B)97.245
C)102.833
D)103.876

Question 31

Exhibit 17-2
You are given the following information about items X,Y,and Z.

Refer to Exhibit 17-2.The weighted aggregate price index for 2010 is

A)163.768
B)1.637
C)63.768
D)2.2

Question 32

The prices for a kilowatt hour of electricity for the years 2007 through 2010 are given below.

Determine the price relatives for the years 2007 through 2010.Let 2007 be the base.

Question 33

Exhibit 17-4

Refer to Exhibit 17-4.The Paasche index in 2010 is (rounded)

A)80.015
B)80.880
C)123.639
D)124.976

Question 34

Exhibit 17-4

Refer to Exhibit 17-4.The price relative for item A in 2010 (with 2005 as the base year)is (rounded)

A)81.579
B)91.418
C)109.388
D)122.581

Question 35

A price relative was computed for houses.The base period is 2005.The price relative in 2010 was 130.The interpretation of the price relative is that

A)there has been a 130% increase in the price of houses from 2005 to 2010.
B)there has been a 30% increase in the price of houses from 2005 to 2010.
C)the price of houses in 2010 was $130 higher than the price in 2005.
D)It is impossible to interpret the index.

Question 36

Exhibit 17-3
You are given the following information about items A,B,C,and D.

Refer to Exhibit 17-3.The Laspeyres index in 2010 (rounded)is

A)96.268
B)97.245
C)102.833
D)103.876

Question 37

You are given the following information on items A,B,C,and D.

The weighted aggregate quantity index when 2005 is used as the base and prices are used as weights is

A)67.956
B)80
C)125
D)147.154

Question 38

The prices of a college Statistics workbook for the years 2005 through 2010 are shown below.

a.Determine the price relatives for the years 2005 through 2010.Let 2005 be the base period.
b.Interpret the meaning of the price relative for 2006.

Question 39

Exhibit 17-4

Refer to Exhibit 17-4.The unweighted aggregate price index in 2010 is (rounded)

A)81.579
B)91.418
C)109.388
D)122.581

Question 40

Exhibit 17-2
You are given the following information about items X,Y,and Z.

Refer to Exhibit 17-2.The price relative for item Y is

A)66.67
B)1.50
C)40.00
D)150.00

Question 41

Below you are given the price of coffee by pound from 2006 to 2010 and the consumer price index with a 2006 base.

Deflate the series.

Question 42

A computer equipment dealer sells three types of printers: Laser I,Laser II,and Laser III.The prices of these printers for the years 2005 and 2010 are given below.

a.
a.Compute an unweighted aggregate price index for the printers.Let 2005 be the base period.
b.Interpret the meaning of the value that you found in Part

Question 43

Consider the following information regarding items A,B,C,and D.

a.Compute the price relative index for 2010 using 2005 as the base year.
b.Compute the unweighted aggregate price index.
c.Compute the Laspeyres index.
d.Compute the Paasche index.
e.Construct a weighted aggregate quantity index using 2005 as the base year and price as the weight.

Question 44

A pet store specializes in breeding and selling small dogs.Below you are given the prices they charged for various breeds in 2005 (base period)and 2010 (current period),with the associated number of dogs sold in 2010 (current period).

a.Compute an unweighted aggregate price index for 2010 using 2005 as the base period.
b.Compute a weighted aggregate price index (Paasche index)for 2010.

Question 45

An automobile dealership sells 3 different types of automobiles.Unit prices and the number of units sold in 2005,as well as prices for 2010,are shown below.

Compute a weighted aggregate price index (Laspeyres index)for 2010 with 2005 as the base period.Explain your results.

Question 46

Consider the following data on personal savings and prices.

Find the deflated savings for these years and comment on the result.

Question 47

An electronics and appliance store sells three different brands of DVD recorders.The three brands sold by the store are Brand A,Brand B,and Brand C.The unit prices for the years 2005 and 2010,with the volume of sales (units sold)for 2005,are given below.

a.Compute an unweighted aggregate price index for DVD recorders with 2005 as the base period.
b.Compute a weighted aggregate price index (Laspeyres index)for 2010 with 2005 as the base period.

Question 48

The table below gives the prices of four items-A,B,C,and D-sold at a store in 2005 and 2010.

a.Using 2005 as the base year,calculate the price relative index for the four items.
b.Calculate an unweighted aggregate price index for these items.
c.Find the Laspeyres weighted aggregate index for these items.
d.Find the Paasche index for these items.
e.Construct a weighted aggregate quantity index using 2005 as the base year and price as the weight.

Question 49

The prices of 3 products for the years 2005 and the number of units sold in 2005,as well as prices for 2010 are shown below.

Compute a weighted aggregate price index (Laspeyres index)for 2010 with 2005 as the base period.

Question 50

The prices of dining room tables,sofas,and entertainment centers at a furniture store for the years 2005 and 2010 are shown below.

a.
a.Compute an unweighted aggregate price index.Let 2005 be the base period.
b.Interpret the meaning of the value that you found in Part

Question 51

The yearly incomes of a college graduate for the years 2007 through 2010 and the Consumer Price Index are shown below.

a.Use the Consumer Price Index to deflate the yearly income series.
b.Compare the individual's income to his/her real income for the years 2009 and 2010.Comment on your findings.

Question 52

You are given the following information regarding four items.

a.Calculate the price relative index for each item,using 2005 as the base year.
b.Calculate the unweighted aggregate price index.
c.Calculate a Laspeyres index.
d.Calculate a Paasche index.
e.Construct a weighted aggregate quantity index using 2005 as the base year and price as the weight.