Question

1. Which of the following statements is (are) correct? (x) The term “inflation” is used to...

1. Which of the following statements is (are) correct?
(x) The term “inflation” is used to describe a situation in which the overall level of prices in the economy is increasing and deflation occurs if the price level is decreasing.
(y) The inflation rate is calculated as the percentage change in the price level from the previous period.
(z) If inflation occurs, the typical household will spend more dollars to maintain the same standard of living.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (x) only


2. Which of the following statements about the CPI is (are) correct?
(x) The CPI is calculated monthly by the Bureau of Labor Statistics and the BLS includes thousands of goods and services in the basket that forms the basis for the consumer price index.
(y) In the consumer price index (CPI), goods and services are weighted according to how much consumers buy of each item.
(z) For any given year, the CPI is the price of the basket of goods and services in the given year divided by the price of the basket in the base year, then multiplied by 100.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (y) only


3. Which of the following statements is (are) correct?
(x) Each good and service in the CPI market basket is weighted according to its price
(y) The CPI is more commonly used as a gauge of inflation than the GDP deflator because the CPI better reflects the goods and services bought by consumers.
(z) The consumer price index (CPI) will be more influenced by a 5 percent increase in the price of housing than a 5 percent increase in the price of food and beverages because housing is a bigger part of the market basket than food and beverages.
A. (x), (y) and (z)
B. (x) and (y) only
C. (x) and (z) only
D. (y) and (z) only
E. (y) only

Homework Answers

Answer #1

QUESTION 1

Answer: X, Y and Z

Inflation is the increase in general price level which reduces the purchasing power of the people. If the price level decreases it will cause deflation in the economy. The inflation is calculated as the percentage change in the price level or price index for a particular period compared to the previous period. When inflation takes place in an economy, people will have to spend more if they want to maintain same level of living because due to inflation the value of money will decline and the purchasing power will decrease. So more dollars must be spend.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
14. Which of the following statements is (are) correct? (x) One problem with the consumer price...
14. Which of the following statements is (are) correct? (x) One problem with the consumer price index stems from the fact that, over time, consumers tend to buy larger quantities of goods that have become relatively less expensive and smaller quantities of goods that have become relatively more expensive. This problem is called substitution bias. (y) By not taking into account the possibility of consumer substitution, the CPI understates the cost of living. (z) Suppose the typical consumer buys more...
The measurement problems in the consumer price index (CPI) as an indicator of the cost of...
The measurement problems in the consumer price index (CPI) as an indicator of the cost of living are important because many government programs use the CPI to adjust for changes in the price level. Select one: True False Suppose that in 2016, the CPI for energy rose from 183.4 to 193.3 while the CPI for all items rose from 236.5 to 241.4. As a result the inflation rate for energy is lower than the overall inflation rate in 2016. Select...
11. The price index is 200 in 2008. In 2009, the price index is 216. What...
11. The price index is 200 in 2008. In 2009, the price index is 216. What is the inflation rate in 2009? A. 4 percent B. 8 percent C. 16 percent D. 32 percent E. 216 percent 12. Which change in the price index shows the greatest rate of inflation? A. 150 to 160 B. 160 to 170 C. 170 to 180 D. 180 to 190 E. All changes show the same rate of inflation. 13. Which of the following...
2. Which of the following statements is (are) correct? (x) The increase in international trade in...
2. Which of the following statements is (are) correct? (x) The increase in international trade in the United States during the past 50 years is partly due to improvements in transportation, advances in telecommunications, and an increase in the trade of goods that have a high value per pound. (y) Over the last 50 years U.S. exports and imports have increased and U.S. imports as a percentage of GDP have more than doubled but U.S. exports as a percentage of...
7. According to the textbook, which of the following statements is (are) correct? (x) If net...
7. According to the textbook, which of the following statements is (are) correct? (x) If net exports are zero, the country has balanced trade. (y) If a country sells $50 billion of goods and services to people overseas and buys $45 billion of goods and services from them, then it has a trade surplus. (z) If a country has $2.4 billion of net exports and purchases $4.8 billion of goods and services from foreign countries, then it has $7.2 billion...
Which of the following statements is (are) correct? (x) The balance sheet shows the book value...
Which of the following statements is (are) correct? (x) The balance sheet shows the book value of common stock and paid-in surplus. (y) Net plant and equipment is listed on the balance sheet as an asset and the income statement includes the depreciation on the plant and equipment as an expense. (z) Common stock and retained earnings are listed on the income statement but not the balance sheet. A. (x), (y) and (z) B. (x) and (y) only C. (x)...
Which of the following statements is (are) correct? (x) Selling a good at a price where...
Which of the following statements is (are) correct? (x) Selling a good at a price where the demand curve intersects the marginal cost curve will guarantee that the firm will not earn losses. (y) A profit-maximizing perfect competitor will produce the level of output at which price is equal to marginal cost, but the typical profit-maximizing monopolistic competitor will not. (z) Selling a good at a price where the demand curve intersects the marginal cost curve is consistent with the...
1) Which of the following statements is TRUE? a) The wholesale price index can be used...
1) Which of the following statements is TRUE? a) The wholesale price index can be used to measure price inflation in the market basket of goods and services purchased by households. b) The GDP deflator measures the rate at which real GDP falls as the exchange rate rises. c) The unemployment rate is a leading indicator of over-all economic activity. d) Real variables remove the effect on inflation from the underlying change from a measure of economic activity measured in...
Which of the following statements is (are) correct? (x) When the price of a good decreases,...
Which of the following statements is (are) correct? (x) When the price of a good decreases, sellers produce less of the good. (y) When the price of a good is high, selling the good is profitable, and so the quantity supplied is large. (z) The cause of a supply curve shift to the right could be a decrease in the price of an input or a technological improvement in the production of the good but not an increase in the...
Which of the following describe the consumer price index (CPI)? It: compares the cost of the...
Which of the following describe the consumer price index (CPI)? It: compares the cost of the typical basket of goods consumed in period 1 to the cost of a basket of goods typically consumed in period 2. compares the cost in the current period to the cost in a reference base period of a basket of goods typically consumed in the base period. measures the increase in the prices of the goods included in GDP. is the ratio of the...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT