# Chapter 12 Unemployment and Inflation

| November 9, 2018

8)
Using the information in Table 12.2, the Astro Consumer Price Index for 2012 is
A)
87.
B)
104.
C)
131.
D)
298.

9)
Using the information in Table 12.2, the inflation rate from 2010 to 2011 is
A)
26%.
B)
38%.
C)
42%.
D)
49%.

10)
Using the information in Table 12.2, the inflation rate from 2011 to 2012 is
A)
4%.
B)
5%.
C)
17%.
D)
31%.

11)
Using the information in Table 12.2, the% increase in prices over the two year
period from 2010 to 2012 is approximately
A)
26%.
B)
31%.
C)
38%.
D)
98%.

12)
What does the Consumer Price Index (CPI) measure?
A)
prices of durable goods
B)
prices of non durable goods
C)
the cost of living over time
D)
the cost of replacing lost items

13)
The Consumer Price Index (CPI) differs from a chain-weighted price index in
that the CPI
A)
requires calculation of GDP, while the chain-weighted index does not.
B)
measures the costs of a typical fixed basket of goods over time, while the
chain-weighted index does not.
C)
allows for the goods consumed in an economy to change over time, while the
chain-weighted index does not.
D)
compares the prices of all goods in one year to the prices of all goods in
other years.

14)
The chain-weighted index for GDP and the CPI differ in that the CPI
A)
excludes price changes from used and imported goods while the chain-weighted
index includes these price changes.
B)
asks how much a fixed basket of goods costs in the current year as compared to
the cost of those same goods in a base year while the chain-weighted index
takes an average of price changes using base years from neighboring years.
C)
is calculated by the Commerce Department while the chain-weighted index is
calculated by local newspapers.
D)
is calculated in nominal terms and the chain-weighted index is calculated in
real terms.

15)
Chain-weighted price indices are constructed such that
A)
prices in different economies can be directly compared with one another.
B)
prices in different years can be directly compared with one another.
C)
all years’ levels of GDP are directly related to a base year level of GDP.
D)
prices of one good can be directly compared with prices of other goods.

16)
Most economists believe that price indices
A)
overstate inflation and understate growth in nominal GDP.
B)
overstate inflation and understate growth in real GDP.
C)
understate inflation and understate growth in nominal GDP.
D)
understate inflation and understate growth in real GDP.

17)
The principal reason why the chain-weighted index for GDP and the CPI both
overstate actual changes in prices is that
A)
it is hard to measure quality changes.
B)
the basket of goods purchased by consumers never changes.
C)
price data is often inaccurate.
D)
all of the above

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