Broward College EC 2013 test 6 Question1)_ is a measure of the changes in the average prices received by domestic producers for their output

Broward College

EC 2013

test 6

Question1)_ is a measure of the changes in the average prices received by domestic producers for their output.

Question 1 options:

	The consumer price index
	The producer price index
	Personal consumption expenditure
	The GDP deflator

 

Question 2 

 

Inflation has significant long-run effects on the economy because:

Question 2 options:

	it distorts the price signal and produces incentives for speculation.
	it can enhance the purchasing power of a fixed income.
	it can lead to an improvement in real values.
	creditors can gain from inflation.

 

Question 3 

 

Retirees and creditors:

Question 3 options:

	benefit from inflation because they are paid in cheaper dollars.
	benefit from inflation because interest rates rise.
	are hurt by inflation because their purchasing power drops.
	are hurt by inflation because taxes fall.

 

Question 4 

 

If the cost of a typical market basket is 400 in 2018, 410 in 2019, and 405 in 2020, then during this period the economy is undergoing:

Question 4 options:

	inflation.
	disinflation.
	deflation.
	hyperinflation.

 

Question 5 

 

Which of the following assumptions is NOT a problem in using the consumer price index (CPI) to accurately state the rate of inflation?

Question 5 options:

	The CPI assumes that people do not substitute goods.
	The CPI does not account for quality changes.
	The CPI does not include new products.
	The CPI does not deal with producer prices.

 

Question 6 

 

Arlina got a 5% raise while the rate of inflation was 6%. Arlina's standard of living:

Question 6 options:

	rose by about 1%.
	rose by about 2%.
	fell by about 3%.
	fell by about 1%.

 

Question 7 

 

The GDP deflator shows that since the mid-1980s, the U.S. economy has had:

Question 7 options:

	deflation.
	hyperinflation.
	an increasing inflation rate.
	disinflation.

 

Question 8 

 

Nominal GDP in 2006 was $13,458.2 billion. The GDP deflator uses 2000 as the base year. In 2006, the GDP deflator was 116.9. What was the real GDP for 2006?

Question 8 options:

	$15,732.6 billion
	$15,746.1 billion
	$11,512.6 billion
	$11,522.5 billion

 

Question 9 

 

The consumer price index does NOT include:

Question 9 options:

	the price of a haircut.
	property taxes.
	apartment rental rates.
	the price of milk.

 

Question 10 

 

Dave brags to his dad that his $45,000 starting salary as a computer programmer is much higher than his dad's $28,000 starting salary some years ago. If the consumer price index the year Dave begins work is 180.5 and the year his dad started work it was 110.8, Dave is:

Question 10 options:

	correct. Adjusting for price changes, his salary is more than his dad's salary.
	correct. Adjusting for quantity changes, his salary is more than his dad's salary.
	mistaken. Adjusting for price changes, his salary is less than his dad's salary.
	mistaken. Adjusting for quantity changes, his salary is less than his dad's salary.

 

Question 11 

 

_____ is an overall decline in prices throughout the economy.

Question 11 options:

	Disinflation
	Deflation
	Hyperinflation
	The price level

 

Question 12 

 

If the nominal GDP is $13 trillion for a given year and the GDP deflator for that year is 115, then the real GDP is:

Question 12 options:

	$11.3 trillion.
	$14.95 trillion.
	$12 trillion.
	$13 trillion.

 

Question 13 

 

If nominal GDP in 2014 is $20,000 billion while real GDP is $16,000 billion, then the GDP deflator in 2014 is:

Question 13 options:

	80.
	110.
	125.
	150.

 

Question 14 

 

The main reason people were unemployed in the United States in 2012 was because they:

Question 14 options:

	were new entrants into the labor force.
	were reentrants into the labor force.
	lost their job.
	left their job.

 

Question 15 

 

Hannah is not at work because she broke her leg, but she will return once it heals. She is:

Question 15 options:

	unemployed.
	in the labor force.
	temporarily unemployed.
	part-time employed.

 

Question 16 

 

Nominal GDP in the first quarter of 2010 was $14,592.3 billion. The GDP deflator was 110.2 in the first quarter of 2010. Real GDP for the first quarter of 2010 was equal to:

Question 16 options:

	$13,133.1 billion.
	$13,241.7 billion.
	$13,103.9 billion.
	$13,424.9 billion.

 

Question 17 

 

Which statement about chained consumer price index for urban consumers (C-CPI-U) is TRUE?

Question 17 options:

	It does a better job in approximating a cost-of-living index than the CPI.
	It takes less time to estimate than the CPI.
	It is generally higher than the CPI.
	It has no advantage over the CPI.

 

Question 18 

 

For your purchasing power to stay the same, your wages must:

Question 18 options:

	increase faster than the rate of inflation.
	increase at the same rate as inflation.
	decrease as the rate of inflation increases.
	increase more slowly than the rate of inflation.

 

Question 19 

 

If your salary was $50,000 last year and this year you receive a cost-of-living increase tied to the consumer price index (CPI), what will your salary be, assuming the CPI has risen from 110 to 114?

Question 19 options:

	$49,114
	$50,114
	$50,300
	$51,818

 

Question 20 

 

	2012	2013	2014
Nominal GDP (billions of $)	7,280		8,000
Real GDP (billions of $)	7,280	7,425
GDP deflator		103.6	106.1

 

Reference: Ref 6-1

(Table) According to the table, nominal GDP for 2013 is approximately:

Question 20 options:

	$7,292 billion.
	$7,492 billion.
	$7,692 billion.
	$7,892 billion.

 

Question 21 

 

Most economists believe that the consumer price index ______ the rate of inflation.

Question 21 options:

	understates
	overstates
	accurately states
	disinflates

 

Question 22 

 

	2012	2013	2014
Nominal GDP (billions of $)	$2,291		$8,511
Real GDP (billions of $)	$4,500	$5,865
GDP Deflator		86.1	112.7

 

Reference: Ref 6-2

(Table) According to the table, the GDP deflator for 2012 is approximately:

Question 22 options:

	40.9.
	50.9.
	60.9.
	70.9.

 

Question 23 

 

There are 15 million people living in Marketstan, of whom 9 million are working and 1 million are actively looking for work. What is the size of Marketstan's labor force?

Question 23 options:

	15 million
	10 million
	5 million
	16 million

 

Question 24 

 

Suppose the market basket of goods and services cost $3,500 in 1996 but today costs $4,250. Using 1996 as the base year, the consumer price index for today is:

Question 24 options:

	79.6.
	120.0.
	82.4.
	121.4.

 

Question 25 

 

How many hours does a person have to work for pay to be counted as employed?

Question 25 options:

	one hour a week
	1 hour a day
	20 hours a week
	40 hours a week

 

Question 26 

 

If the cost of a typical market basket in 2019 is 400 and the cost of a typical market basket in 2020 is 390, then during this period the economy is undergoing:

Question 26 options:

	inflation.
	disinflation.
	deflation.
	hyperinflation.

 

Question 27 

 

The broadest measure of inflation is:

Question 27 options:

	the consumer price index.
	the GDP deflator.
	the personal consumption expenditures index.
	the producer price index.

 

Question 28 

 

Which of the following groups benefits from an unanticipated rise in the inflation rate?

Question 28 options:

	homeowners with fixed-rate mortgages
	elderly people living on a fixed income
	creditors or lenders
	workers on contracts without escalator clauses

 

Question 29 

 

Johnny is 17 and works in his father's bubble gum store 10 hours a week after school. His father pays him no money but buys video games for him. Johnny earns a spot on the high school football team and no longer works in his father's store. How is Johnny categorized in the unemployment figures?

Question 29 options:

	Johnny is considered unemployed.
	Johnny is considered employed because he works hard at his football career.
	Johnny is not part of the labor force.
	Johnny is considered underemployed.

 

Question 30 

 

Suppose in 2010 the cost of purchasing a basket of goods was $100. That same basket cost $150 in 2011. If 2010 is the base year, the consumer price index for 2011 is:

Question 30 options:

	100.
	50.
	250.
	150.

 

Question 31 

 

Jill has an escalator clause in her labor contract that gives her a raise commensurate with the consumer price index (CPI). Last year she earned $40,000 and the CPI was 100. If the CPI this year is 110, her new salary is:

Question 31 options:

	$40,110.
	$50,000.
	$40,100.
	$44,000.

 

Question 32 

 

In 2012, the group with the LOWEST unemployment rate in the United States was:

Question 32 options:

	high school graduates.
	college graduates and higher.
	people with less than a bachelor's degree.
	people with less than a high school diploma.

 

Question 33 

 

Jennifer just got news that she is getting a 5% raise. However, the Bureau of Labor Statistics just reported that prices are rising by 7%.

Question 33 options:

	Jennifer is ahead by 2%.
	Jennifer is losing purchasing power by 2%.
	Inflation has no impact on purchasing power.
	Jennifer's purchasing power is rising by 7%.

 

Question 34 

 

	2012	2013	2014
Nominal GDP (billions of $)	7,280		8,000
Real GDP (billions of $)	7,280	7,425
GDP deflator		103.6	106.1

 

Reference: Ref 6-1

(Table) According to the table, the GDP deflator for 2012 is:

Question 34 options:

	0.
	1.
	72.8.
	100.

 

Question 35 

 

Which of the following statements does NOT describe a problem in measuring the consumer price index (CPI)?

Question 35 options:

	The CPI measures only private goods and services.
	The CPI uses a fixed market basket of goods determined by surveys that are three to five years old.
	Approximately 10% of the original market basket must be replaced each year by products that are improved or modified.
	The CPI quickly includes new products in its baskets.