Question 1

If you have a mortgage on your house at 6 percent and the inflation rate when the mortgage was acquired was 3 percent but has since increased and is now 8 percent per year; the current real interest rate is

Accepted Answer

A)   14 percent per year.
B)   6 percent per year.
C)   0 percent per year.
D)   -2 percent per year.
E)   8 percent per year.F) C) and D)
G) B) and E)

Question 2

If we look at the nominal versus real wage rates paid to Presidents over time, we find that

Accepted Answer

A)   George Washington was paid a higher real wage rate than Bill Clinton.
B)   George W.Bush is the highest paid according to real wage rates.
C)   the real wage rate has steadily increased to $400,000 per year.
D)   the nominal wage has increased and decreased at different times because of inflation.
E)   George W.Bush's nominal wage is about equal to the average nominal wage paid all presidents.F) A) and E)
G) A) and D)

Question 3

Item  Quantity (2009)  Price (2009)   Quantity (2010)  Price (2010)   Magazines 400$5.00450$4.50 Movie tickets 50$6.00200$8.00 Pizzas 100$10.00120$10.50\begin{array} { | c | c | c | c | c | } \hline \text { Item } & \begin{array} { c } \text { Quantity } \( 2009 ) \end{array} & \text { Price (2009)  } & \begin{array} { c } \text { Quantity } \( 2010 ) \end{array} & \text { Price (2010)  } \\hline \text { Magazines } & 400 & \$ 5.00 & 450 & \$ 4.50 \\hline \text { Movie tickets } & 50 & \$ 6.00 & 200 & \$ 8.00 \\hline \text { Pizzas } & 100 & \$ 10.00 & 120 & \$ 10.50 \\hline\end{array} Item  Magazines  Movie tickets  Pizzas ​ Quantity (2009) ​40050100​ Price (2009)  $5.00$6.00$10.00​ Quantity (2010) ​450200120​ Price (2010)  $4.50$8.00$10.50​​  
The data in the table above shows the consumption by families in an economy.The year 2009 is the reference base period
-Based on the table above, the cost of the base period market basket in the base period is

Accepted Answer

A)   $3,300.
B)   $21.00.
C)   $3,250.
D)   $4,650.
E)   $4,885. F) A) and E)
G) A) and B)

Question 4

If you get an 8 percent increase in your nominal income, your real income

Accepted Answer

A)   definitely increases.
B)   increases only if the inflation rate is more than 8 percent.
C)   increases only if the inflation rate is equal to 8 percent.
D)   increases only if the inflation rate is less than 8 percent.
E)   increases if the inflation rate is more than or equal to 8 percent.F) A) and D)
G) D) and E)

Question 5

The presence of new goods that are of higher quality than the old goods leads the BLS to

Accepted Answer

A)   update the market basket every time a new good is available.
B)   do nothing because at least some people still buy the old goods.
C)   try to separate price differences from improvements in quality.
D)   actually understate the cost of living when calculating the CPI.
E)   immediately update the reference base period used in calculating the CPI.F) C) and D)
G) None of the above

Exam 7: The Cpi and the Cost of Living

If you get an 8 percent increase in your nominal income, your real income

Correct Answer
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Correct Answer
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If you have a mortgage on your house at 6 percent and the inflation rate when the mortgage was acquired was 3 percent but has since increased and is now 8 percent per year; the current real interest rate is

Correct Answer
verified

If we look at the nominal versus real wage rates paid to Presidents over time, we find that

Correct Answer
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The presence of new goods that are of higher quality than the old goods leads the BLS to

Correct Answer
verified

Exam 7: The Cpi and the Cost of Living

If you get an 8 percent increase in your nominal income, your real income

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If you have a mortgage on your house at 6 percent and the inflation rate when the mortgage was acquired was 3 percent but has since increased and is now 8 percent per year; the current real interest rate is

Correct AnswerverifiedShow Answer

If we look at the nominal versus real wage rates paid to Presidents over time, we find that

Correct AnswerverifiedShow Answer

The presence of new goods that are of higher quality than the old goods leads the BLS to

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
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