# Chapter 12 Unemployment and Inflation

| November 9, 2018

28)
What is the Consumer Price Index (CPI)?

29)
What is a “cost-of-living” adjustment?

30)
Why do both the chain-weighted index for GDP and the CPI overstate actual price
increases?

31)
How costly are biases in the CPI?

12.5 Inflation

1)
The percentage rate of change in the price level is called the
A)
chain-weighted price index.
B)
Consumer Price Index.
C)
rate of inflation.
D)
rate of absorption.

2)
Suppose that a price index in Paraguay was 131 in 2011 and 152 in 2012. The
inflation rate between those two years was approximately
A)
10.5%.
B)
11.6%.
C)
16%.
D)
21%.

3)
Suppose that the CPI in Thailand was 345 in 2011 and 388 in 2012. The inflation
rate between those two years was approximately
A)
11.2%.
B)
14.3%.
C)
12.5%.
D)
43%.

4)
Suppose that the chain-weighted index for GDP in Panama was 180 in 2011 and 188
in 2012. The inflation rate between those two years was approximately
A)
1.1%.
B)
4.4%.
C)
8%.
D)
10.4%.

5)
Suppose that a price index in Latvia was 120 in 2011 and 150 in 2012. The
inflation rate between those two years was approximately
A)
8%.
B)
12.5%.
C)
25%.
D)
30%.

6)
Suppose that the chain-weighted index for GDP in Gambia was 275 in 2011 and 350
in 2012. The inflation rate between those two years was approximately
A)
20.2%.
B)
27.3%.
C)
37.5%.
D)
75%.

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