Question 1

When discussing inflation,we generally speak of it in terms of:

Accepted Answer

Inflation is typically measured by the percent change in the consumer price index (CPI) or the GDP deflator, both of which reflect changes in the price level of goods and services.

Question 2

In 2004,the movie Spiderman 2 generated about $40 million on its opening day.In 1992,Batman Returns generated $35 million on its opening day.If the CPI in 2006 is 100;in 2004,it is 93.7;and in 1992,69.5,__________ is the larger single-day grossing movie,with __________ in revenues in 2006 dollars.

Accepted Answer

To compare the revenues in 2006 dollars, adjust for inflation using the CPI. Batman Returns' $35 million in 1992 is equivalent to $35 million * (100/69.5) = $50.36 million in 2006 dollars. Spiderman 2's $40 million in 2004 is equivalent to $40 million * (100/93.7) = $42.7 million in 2006 dollars. Therefore, Batman Returns is the larger single-day grossing movie with $50.3 million in 2006 dollars.

Question 3

Fiat money has value because:

Accepted Answer

Fiat money has value because people believe it has value due to social convention. It is not backed by gold and does not have intrinsic value. Therefore, option E which states that both A and B are correct is the best choice.

Question 4

Fiat money has value because:

Accepted Answer

Fiat money does not have intrinsic value or a backing of precious metals like gold or silver. Its value is based on the belief and trust that people have in the currency and the government or institution that issues it. This belief is often supported by the fact that the currency is widely accepted for goods and services, and can be exchanged for other forms of value such as assets or other currencies.

Question 5

__________ are(is)the most liquid asset.

Accepted Answer

Currency is the most liquid asset because it can be immediately used for transactions without any conversion or delay.

Question 6

Often,when discussing inflation,we use the "core rate of inflation," which excludes __________ from its calculation.

Accepted Answer

The core rate of inflation excludes food and energy prices from its calculation. This is because these prices can be highly volatile and can fluctuate rapidly due to factors such as weather patterns or geopolitical events. By excluding them, the core rate of inflation provides a more stable and accurate measure of overall price increases.

Question 7

Money that has no value except as money is called __________ money.

Accepted Answer

Fiat money is money that has no intrinsic value and is worth only what the government declares it to be worth. It is not backed by a commodity such as gold or silver.

Question 8

A country on the silver standard uses:

Accepted Answer

A country on the silver standard uses commodity money, specifically silver coins. The value of the coins is based on the weight and purity of the silver in them.

Question 9

Today,the Wendy's cheeseburger is on the 99-cent menu.If the CPI in 1979 was 36 and the CPI in 2006 was 100,what is the price of a 2006 cheeseburger in 1979 dollars?

Accepted Answer

To find the price of a 2006 cheeseburger in 1979 dollars, use the formula: Price in 1979 dollars = Price in 2006 dollars * (CPI in 1979 / CPI in 2006). So, $0.99 * (36/100) = $0.3564, which rounds to $0.36.

Question 10

Inflation is calculated as:

Accepted Answer

Inflation is measured as a percentage change in the price level over a given period. Option C accurately states this definition. Options A and B are incorrect as they do not specify the percentage change aspect of inflation, while options D and E are also incorrect as they do not accurately reflect the concept of inflation.

Question 11

In the United States,money is backed by:

Accepted Answer

Money in the United States is not backed by any physical commodity such as gold, silver or oil. It is backed by the trust and confidence of the people in the government and the economy. This is known as fiat money, where the value of the currency is not derived from a tangible asset but from the faith in its stability and the government that issues it.

Question 12

If 
Is the price level in time t,inflation is calculated as:

Accepted Answer

The answer of If 
Is the price level in time...

Question 13

Alternative forms of money include:

Accepted Answer

All of the above choices are alternative forms of money. Frequent flier miles can be used to purchase flights, gift cards are a form of stored value that can be exchanged for goods, debit cards are linked to a bank account and can be used to make purchases, and PayPal is a digital payment service that allows for online transactions.

Question 14

In 1979,President Carter appointed __________ as chairman of the Board of Governors of the Federal Reserve to battle __________.

Accepted Answer

President Carter appointed Paul Volcker as chairman of the Board of Governors of the Federal Reserve to battle inflation. Volcker is known for implementing tight monetary policy to combat inflation, which led to high interest rates and a deep recession in the early 1980s.

Question 15

The quote "Inflation is always and everywhere a fiscal phenomenon" is attributed to:

Accepted Answer

The quote is often attributed to Thomas Sargent, reflecting his views on the relationship between fiscal policy and inflation. However, it's important to note that a very similar sentiment, "Inflation is always and everywhere a monetary phenomenon," is famously attributed to Milton Friedman, not Thomas Sargent. This might cause some confusion, but no option for Friedman is provided here.

Question 16

Liquidity is a measure of:

Accepted Answer

Liquidity refers to how quickly an asset can be converted into cash or currency without significant loss in value. Therefore, option D, which describes the ability to convert an asset to currency, is the best choice. Options A, B, C, and E do not accurately reflect the concept of liquidity.

Question 17

Silver,gold,and chocolate are examples of:

Accepted Answer

Silver, gold, and chocolate are examples of commodity money, which derive their value from their use as a commodity, rather than being declared valuable by a government (fiat money) or backed by a government or other entity (backed money).

Question 18

What contributed to Reagan's defeat of Carter in the 1980 presidential election?

Accepted Answer

The answer of What contributed to Reagan's defeat of Carter...

Question 19

In 1979,in the face of rising competition in the fast food hamburger market,McDonald's reduced the price of its cheeseburger to $0.43.If the CPI in 1979 was 36 and the CPI in 2006 was 100,what is the price of a 1979 cheeseburger in 2006 dollars?

Accepted Answer

To find the price of a 1979 cheeseburger in 2006 dollars, we need to adjust the original price using the CPI ratio of 2006/1979:

Price in 2006 dollars = Price in 1979 dollars x (CPI in 2006/CPI in 1979)

Price in 2006 dollars = $0.43 x (100/36)

Price in 2006 dollars = $1.19

Therefore, the price of a 1979 cheeseburger in 2006 dollars is $1.19. Option C is the correct answer.

Question 20

The quote "Inflation is always and everywhere a monetary phenomenon" is attributed to:

Accepted Answer

The quote "Inflation is always and everywhere a monetary phenomenon" is attributed to Milton Friedman, a Nobel Prize-winning economist who was a proponent of monetarism. He believed that the main cause of inflation was excessive growth in the money supply by central banks.

Quiz 8: Inflation

When discussing inflation,we generally speak of it in terms of:

In 2004,the movie Spiderman 2 generated about $40 million on its opening day.In 1992,Batman Returns generated $35 million on its opening day.If the CPI in 2006 is 100;in 2004,it is 93.7;and in 1992,69.5, is the larger single-day grossing movie,with in revenues in 2006 dollars.

Fiat money has value because:

Fiat money has value because:

__________ are(is) the most liquid asset.

Often,when discussing inflation,we use the "core rate of inflation," which excludes __________ from its calculation.

Money that has no value except as money is called __________ money.

A country on the silver standard uses:

Today,the Wendy's cheeseburger is on the 99-cent menu.If the CPI in 1979 was 36 and the CPI in 2006 was 100,what is the price of a 2006 cheeseburger in 1979 dollars?

Inflation is calculated as:

In the United States,money is backed by:

If Is the price level in time t,inflation is calculated as:

Alternative forms of money include:

In 1979,President Carter appointed as chairman of the Board of Governors of the Federal Reserve to battle .

The quote "Inflation is always and everywhere a fiscal phenomenon" is attributed to:

Liquidity is a measure of:

Silver,gold,and chocolate are examples of:

What contributed to Reagan's defeat of Carter in the 1980 presidential election?

In 1979,in the face of rising competition in the fast food hamburger market,McDonald's reduced the price of its cheeseburger to $0.43.If the CPI in 1979 was 36 and the CPI in 2006 was 100,what is the price of a 1979 cheeseburger in 2006 dollars?

The quote "Inflation is always and everywhere a monetary phenomenon" is attributed to: