Question

3 questions

question 1

GDP per capita is:

Multiple Choice

highly correlated with quality of life.

loosely correlated with quality of life.

perfectly correlated with quality of life.

negatively correlated with quality of life.

question 2

Suppose you are given the following annual deflator information for the US (https://fred.stlouisfed.org). Using the information from the table we can conclude that the year with the lowest price level was:

Year	Deflator
2008	99
2009	100
2010	101
2011	103
2012	105
2013	107
2014	109
2015	110

Multiple Choice

2012

2009

2015

2008

question 3

Year	CPI
2010	95
2011	100
2012	105
2013	104
2014	106

According to the table shown, what can be said about the cost of living in 2012?

Multiple Choice

The typical consumer must spend 5% more in 2012 than he did in 2011 in order to buy the same goods.

Every consumer will experience a 5% increase in his cost of living from 2011.

Whatever consumers bought in 2012 cost 5% more than what they spent in 2011.

None of these statements is true.

Answer 1

1) gdp per capita is highly correlated with quality of life.

This is so because when income is high people will consumer more nutrients and have income to spend on health issues.

2) deflator of calculated by diving the nominal gdp by real gdp and then multiplying it by 100. Thus higher value implies higher inflation rate.

2008 is the year with the lowest Price level.

3) inflation rate in 2012 =( 105-100)100/100= 5%

First statement is correct.

CPI gives you the cost of certain basket of goods. So the inflation rate is given for the same goods he consumed in 2011.