Question 1

The costs associated with constantly revising the prices of goods and services as a result of inflation are known as _____ costs.

Accepted Answer

Menu costs are the expenses that businesses incur when they have to constantly adjust their prices to keep up with inflation. This includes costs related to reprinting menus, updating price lists, and changing price tags, among other activities.

Question 2

Suppose that a grocery store has to constantly keep changing the list price of all the products that it sells because of inflation. The costs that are associated with this are known as _____ costs.

Accepted Answer

The costs associated with frequently changing prices due to inflation are known as menu costs. These include the physical costs of changing price tags and the administrative costs of updating systems and communicating changes.

Question 3

_____ are two types of transaction costs that are associated with inflation.

Accepted Answer

Menu costs and shoe-leather costs are two types of transaction costs associated with inflation. Menu costs refer to the costs businesses incur when they need to change prices frequently due to inflation. Shoe-leather costs refer to the costs individuals incur by trying to avoid holding onto cash that will lose value due to inflation, such as the time and effort spent going to the bank more frequently.

Question 4

Suppose that the Consumer Price Index (CPI) in 2017 is 100 and in 2018 is 108. The inflation rate between 2017 and 2018 is _____ percent.

Accepted Answer

The inflation rate is calculated as the percentage change in the CPI from one year to the next. The formula is: [(CPI in 2018 - CPI in 2017) / CPI in 2017] * 100 = [(108 - 100) / 100] * 100 = 8%.

Question 5

If the CPI in 2017 is 100 and the inflation rate between 2017 and 2018 is 6 percent, then the CPI for 2018 is

Accepted Answer

The CPI for 2018 is calculated by increasing the 2017 CPI by the inflation rate: 100 * (1 + 0.06) = 106.

Question 6

Suppose that the cost of a representative basket used to calculate the Consumer Price Index (CPI) is $500 in the base year 2000. Further, suppose that the cost of the same basket is $525 in 2017. The CPI for the base year is _____, and the CPI for 2017 is:

Accepted Answer

The CPI for the base year is always 100. For 2017, the CPI is calculated as ($525/$500) * 100 = 105.

Question 7

Suppose that the cost of a representative basket used to calculate the Consumer Price Index (CPI) is $500 in the base year 2000. Further, suppose that the cost of the same basket is $525 in 2017. The CPI for 2017 is _____, and the inflation rate between 2000 and 2017 is _____ percent.

Accepted Answer

The CPI for 2017 is calculated by taking the cost of the basket in 2017 ($525) divided by the cost of the basket in the base year 2000 ($500) and then multiplying by 100. This gives a CPI of 105. The inflation rate is the percentage increase in the CPI, which is calculated as (CPI in 2017 - CPI in base year) / CPI in base year * 100. This gives an inflation rate of 5%.

Question 8

Suppose that the cost of a representative basket used to calculate the Consumer Price Index (CPI) is $500 in the base year 2000 and the CPI in the year 2017 is 110. The cost of the representative basket in 2017 is _____, and the rate of inflation between 2000 and 2017 is _____ percent.

Accepted Answer

The cost of the representative basket in 2017 is $550 because the CPI of 110 indicates that the cost has increased by 10% from the base year (100% + 10% = 110%). Therefore, $500 * 1.10 = $550. The rate of inflation between 2000 and 2017 is 10 percent, as the CPI increased from 100 to 110, indicating a 10% increase.

Question 9

The Consumer Price Index (CPI) in January 2017 was 244.02 and the CPI in January 2018 was 249.24. Therefore, the rate of inflation between January 2017-January 2018 was _____ percent.

Accepted Answer

The rate of inflation is calculated by taking the difference in CPI values between two periods, dividing by the earlier period's CPI, and then multiplying by 100 to get a percentage. So, $\frac{249.24 - 244.02}{244.02} \times 100 = 2.14$ percent.

Question 10

Suppose that the Consumer Price Index (CPI) in the country of Stewarton on May 2015 was 110 and on May 2016 was 115. The rate of inflation in Stewarton between May 2015 and May 2016 was _____ percent.

Accepted Answer

The answer of Suppose that the Consumer Price Index (CPI)...

Question 11

The _____ is responsible for collecting monthly data on prices and publishing the data on Consumer Price Index (CPI).

Accepted Answer

The Bureau of Labor Statistics is the agency responsible for collecting and publishing monthly data on prices, including the Consumer Price Index (CPI).

Question 12

Suppose that the nominal GDP of a country is $10 trillion in 2017. Further, the Consumer Price Index (CPI) in 2017 is 125. If the base year is 2000, then real GDP of the country in 2017 in base year prices is _____ trillion.

Accepted Answer

Real GDP is calculated by dividing the nominal GDP by the CPI (expressed as a fraction of 100) to adjust for inflation. Here, real GDP = $10 trillion / (125/100) = $8 trillion.

Question 13

Suppose that the price of a slice of pizza in New York City was 30 cents in 1970. Further, the Consumer Price Index (CPI) in 1970 was 75 and in 2018 is 250. The price of the slice of pizza in 2018 dollars is:

Accepted Answer

The CPI is a measure of the average change in prices over time in a fixed basket of goods and services. In this case, the CPI increased from 75 in 1970 to 250 in 2018, which means that the overall price level increased by a factor of 250/75 = 3.33. Therefore, the price of a slice of pizza in 2018 dollars is 30 cents * 3.33 = $1.00.

Question 14

Suppose that the price of a slice of pizza in New York City in 2017 was $3. Further, the Consumer Price Index (CPI) in 1970 was 75 and in 2017 was 250. The price of the slice of pizza in 1970 dollars is _____ cents.

Accepted Answer

The answer of Suppose that the price of a slice...

Question 15

Suppose that the cost of a representative basket used to calculate the Consumer Price Index (CPI) was $1,000 in the base year 2000. The same basket cost $1,100 in 2016 and $1,150 in 2017. Therefore, the rate of inflation between 2016 and 2017 is _____ percent.

Accepted Answer

The rate of inflation between 2016 and 2017 is calculated by the formula: [(Price in 2017 - Price in 2016) / Price in 2016] * 100. Substituting the given values: [(1150 - 1100) / 1100] * 100 = 4.5%.

Question 16

The high point of a business cycle is called _____, and the low point of a business cycle is called a:

Accepted Answer

The high point of a business cycle is referred to as a "peak," and the low point is known as a "trough."

Question 17

The nominal GDP and the Consumer Price Index (CPI) for the country of Stewarton in 2017 were $15 trillion and 125, respectively. In 2012, the CPI for Stewarton was 120. Therefore, the real GDP of Stewarton in 2012 dollars is _____ trillion.

Accepted Answer

To calculate the real GDP in 2012 dollars, use the formula: Real GDP = Nominal GDP / (CPI in current year / CPI in base year). Here, Real GDP = $15 trillion / (125 / 120) = $14.4 trillion.

Question 18

If the Consumer Price Index (CPI) in January 2017 was 243 and the rate of inflation between January 2017 and January 2018 was 10 percent, then the CPI in January 2018 was:

Accepted Answer

The CPI in January 2018 can be calculated by increasing the January 2017 CPI by 10 percent. This is done by multiplying the January 2017 CPI (243) by 1.10 (to account for the 10 percent increase): 243 * 1.10 = 267.3.

Question 19

Which of the following statements is NOT true?

Accepted Answer

Inflation higher than expected generally benefits borrowers who owe a fixed amount of money, as they repay their debts with money that is worth less. This means the real value of the debt decreases, contrary to the statement in option B.

Question 20

Which of the following statements is NOT true?

Accepted Answer

The unemployment rate is calculated as a percentage of the labor force that is unemployed, not the total population. This means it only includes those who are actively seeking employment and excludes those not seeking employment, such as retirees or students.

Quiz 13: Measuring an Economys Performance

The costs associated with constantly revising the prices of goods and services as a result of inflation are known as _____ costs.

Suppose that a grocery store has to constantly keep changing the list price of all the products that it sells because of inflation. The costs that are associated with this are known as _____ costs.

_____ are two types of transaction costs that are associated with inflation.

Suppose that the Consumer Price Index (CPI) in 2017 is 100 and in 2018 is 108. The inflation rate between 2017 and 2018 is _____ percent.

If the CPI in 2017 is 100 and the inflation rate between 2017 and 2018 is 6 percent, then the CPI for 2018 is

Suppose that the cost of a representative basket used to calculate the Consumer Price Index (CPI) is $500 in the base year 2000. Further, suppose that the cost of the same basket is $525 in 2017. The CPI for the base year is _____, and the CPI for 2017 is:

Suppose that the cost of a representative basket used to calculate the Consumer Price Index (CPI) is $500 in the base year 2000. Further, suppose that the cost of the same basket is $525 in 2017. The CPI for 2017 is _, and the inflation rate between 2000 and 2017 is _ percent.

Suppose that the cost of a representative basket used to calculate the Consumer Price Index (CPI) is $500 in the base year 2000 and the CPI in the year 2017 is 110. The cost of the representative basket in 2017 is _, and the rate of inflation between 2000 and 2017 is _ percent.

The Consumer Price Index (CPI) in January 2017 was 244.02 and the CPI in January 2018 was 249.24. Therefore, the rate of inflation between January 2017-January 2018 was _____ percent.

Suppose that the Consumer Price Index (CPI) in the country of Stewarton on May 2015 was 110 and on May 2016 was 115. The rate of inflation in Stewarton between May 2015 and May 2016 was _____ percent.

The _____ is responsible for collecting monthly data on prices and publishing the data on Consumer Price Index (CPI) .

Suppose that the nominal GDP of a country is $10 trillion in 2017. Further, the Consumer Price Index (CPI) in 2017 is 125. If the base year is 2000, then real GDP of the country in 2017 in base year prices is _____ trillion.

Suppose that the price of a slice of pizza in New York City was 30 cents in 1970. Further, the Consumer Price Index (CPI) in 1970 was 75 and in 2018 is 250. The price of the slice of pizza in 2018 dollars is:

Suppose that the price of a slice of pizza in New York City in 2017 was $3. Further, the Consumer Price Index (CPI) in 1970 was 75 and in 2017 was 250. The price of the slice of pizza in 1970 dollars is _____ cents.

Suppose that the cost of a representative basket used to calculate the Consumer Price Index (CPI) was $1,000 in the base year 2000. The same basket cost $1,100 in 2016 and $1,150 in 2017. Therefore, the rate of inflation between 2016 and 2017 is _____ percent.

The high point of a business cycle is called _____, and the low point of a business cycle is called a:

The nominal GDP and the Consumer Price Index (CPI) for the country of Stewarton in 2017 were $15 trillion and 125, respectively. In 2012, the CPI for Stewarton was 120. Therefore, the real GDP of Stewarton in 2012 dollars is _____ trillion.

If the Consumer Price Index (CPI) in January 2017 was 243 and the rate of inflation between January 2017 and January 2018 was 10 percent, then the CPI in January 2018 was:

Which of the following statements is NOT true?

Which of the following statements is NOT true?