47. Refer to Table 24-1. What belongs in space A?
a.
14
b.
150
c.
144
d.
154
48. Refer to Table 24-1. What belongs in space E?
a.
60%
b.
6%
c.
3.9%
d.
6.7%
49. The market basket used to calculate the CPI in Aquilonia is 4 loaves of bread, 6 gallons of milk, 2 shirts, and 2 pairs of
pants. In 2005, bread cost $1.00 per loaf, milk cost $1.50 per gallon, shirts cost $6.00 each, and pants cost $10.00 per pair.
In 2006, bread cost $1.50 per loaf, milk cost $2.00 per gallon, shirts cost $7.00 each, and pants cost $12.00 per pair. Using
2005 as the base year, what was Aquilonia’s inflation rate in 2006?
a.
b.
c.
d.
50. Between October 2014 and October 2015, the CPI in Canada rose from 120 to 124 and the CPI in Mexico rose from
210 to 229.1. What were the inflation rates for Canada and Mexico over this one-year period?
a.
3.3 percent for Canada and 9.1 percent for Mexico
b.
3.3 percent for Canada and 8.3 percent for Mexico
c.
3.2 percent for Canada and 9.1 percent for Mexico
d.
3.2 percent for Canada and 8.3 percent for Mexico
51. Suppose the price index was 110 in 2004, 120 in 2005, and 125 in 2006. Which of the following statements is correct?
a.
The economy experienced inflation between 2004 and 2005 and between 2005 and 2006.
b.
The inflation rate was positive between 2004 and 2005, and it was negative between 2005 and 2006.
c.
The inflation rate was higher between 2005 and 2006 than it was between 2004 and 2005.
d.
All of the above are correct.
52. The price index was 170 in the first year, 180 in the second year, and 195 in the third year. The inflation rate was
about
a.
5.6 percent between the first and second years, and 7.7 percent between the second and third years.
b.
5.9 percent between the first and second years, and 8.3 percent between the second and third years.
c.
10 percent between the first and second years, and 15 percent between the second and third years.
d.
80 percent between the first and second years, and 95 percent between the second and third years.
53. The price index was 150 in the first year, 142.5 in the second year, and 138.2 in the third year. The economy
experienced
a.
5.0 percent deflation between the first and second years, and 3.0 percent deflation between the second and
third years.
b.
7.5 percent deflation between the first and second years, and 4.3 percent deflation between the second and
third years.
c.
5.3 percent inflation between the first and second years, and 4.1 percent inflation between the second and third
years.
d.
7.5 percent inflation between the first and second years, and 4.3 percent inflation between the second and third
years.
54. If the price index was 90 in year 1, 100 in year 2, and 95 in year 3, then the economy experienced
a.
10 percent inflation between years 1 and 2 ,and 5 percent inflation between years 2 and 3.
b.
10 percent inflation between years 1 and 2, and 5 percent deflation between years 2 and 3.
c.
11.1 percent inflation between years 1 and 2, and 5 percent inflation between years 2 and 3.
d.
11.1 percent inflation between years 1 and 2, and 5 percent deflation between years 2 and 3.
55. The price index was 150 in the first year, 160 in the second year, and 165 in the third year. Which of the following
statements is correct?
a.
The price level was higher in the second year than in the first year, and it was higher in the third year than in
the second year.
b.
The inflation rate was positive between the first and second years, and it was positive between the second and
third years.
c.
The inflation rate was lower between the second and third years than it was between the first and second years.
d.
All of the above are correct.
56. In a particular economy, the price index was 120 in 2012 and 130 in 2013. Which of the following statements is
correct?
a.
The economy experienced a rising price level between 2012 and 2013.
b.
The economy experienced a higher inflation rate between 2012 and 2013 than it had experienced between
2011 and 2012.
c.
The inflation rate between 2012 and 2013 was 10 percent.
d.
The base year is 2011.
57. Which of the following changes in the price index produces the greatest rate of inflation: 80 to 100, 100 to 120, or 150
to 170?
a.
80 to 100
b.
100 to 120
c.
150 to 170
d.
All of these changes produce the same rate of inflation.
58. Which of the following changes in the price index produces the greatest rate of inflation: 106 to 112, 112 to 118, or
118 to 124?
a.
106 to 112
b.
112 to 120
c.
118 to 126
d.
All of these changes produce the same rate of inflation.
59. Which of the following changes in the price index produces the greatest rate of inflation: 100 to 110, 150 to 165, or
180 to 198?
a.
100 to 110
b.
150 to 165
c.
180 to 198
d.
All of these changes produce the same rate of inflation.
60. Which of the following changes in the price index produces the greatest rate of inflation: 12 to 15, 20 to 24, or 30 to
35?
a.
12 to 15
b.
20 to 24
c.
30 to 35
d.
All of these changes produce the same rate of inflation.
61. If the CPI was 110 this year and 100 last year, then
a.
the cost of the CPI basket of goods and services increased by 10 percent this year.
b.
the price level increased by 110 percent this year.
c.
the inflation rate for this year was 10 percent higher than the inflation rate for last year.
d.
All of the above are correct.
62. If the CPI was 125 this year and 120 last year, then
a.
the cost of the CPI basket of goods and services increased by 4.2 percent this year.
b.
the price level increased by 4.2 percent this year.
c.
the inflation rate for this year was 4.2 percent.
d.
All of the above are correct.
63. In an imaginary economy, consumers buy only hot dogs and hamburgers. The fixed basket consists of 10 hot dogs and
6 hamburgers. A hot dog cost $3 in 2006 and $5.40 in 2007. A hamburger cost $5 in 2006 and $6 in 2007. Which of the
following statements is correct?
a.
When 2006 is chosen as the base year, the consumer price index is 90 in 2007.
b.
When 2006 is chosen as the base year, the inflation rate is 150 percent in 2007.
c.
When 2007 is chosen as the base year, the consumer price index is 100 in 2006.
d.
When 2007 is chosen as the base year, the inflation rate is 50 percent in 2007.
64. In an imaginary economy, consumers buy only sandwiches and magazines. The fixed basket consists of 20
sandwiches and 30 magazines. In 2006, a sandwich cost $4 and a magazine cost $2. In 2007, a sandwich cost $5. The base
year is 2006. If the consumer price index in 2007 was 125, then how much did a magazine cost in 2007?
a.
$0.83
b.
$2.25
c.
$2.50
d.
$3.00
65. In an imaginary economy, consumers buy only sandwiches and magazines. The fixed basket consists of 20
sandwiches and 30 magazines. In 2006, a sandwich cost $4 and a magazine cost $2. In 2007, a sandwich cost $5. The base
year is 2006. If the inflation rate in 2007 was 16 percent, then how much did a magazine cost in 2007?
a.
$1.87
b.
$2.08
c.
$2.32
d.
$3.00
66. In an imaginary economy, consumers buy only razors and cologne. The fixed basket consists of 6 razors and 4 bottles
of cologne. A razor cost $20 in 2009 and $25 in 2010. A bottle of cologne cost $30 in 2009 and $40 in 2010. Using 2009
as the base year, which of the following statements is correct?
a.
For the typical consumer, the number of dollars spent on razors is equal to the number of dollars spent on
cologne in each of the two years.
b.
The consumer price index is 310 in 2010.
c.
The rate of inflation is 29.17% in 2010.
d.
None of the above is correct.
67. The price index was 128 in 2013, and the inflation rate was 24 percent between 2012 and 2013. The price index in
2012 was
a.
104.0.
b.
103.2.
c.
158.7.
d.
152.0.
68. The price index was 92 in 2014, and the inflation rate was 8.7 percent between 2013 and 2014. The price index in
2013 was
a.
100.0.
b.
100.7.
c.
83.3.
d.
84.6.
69. For an imaginary economy, the value of the consumer price index was 138.75 in 2016, and the inflation rate was 10
percent between 2015 and 2016. The consumer price index in 2015 was
a.
126.1.
b.
128.8.
c.
148.8.
d.
152.6.
70. For an imaginary economy, the value of the consumer price index was 140 in 2013, and the inflation rate was 5.0
percent between 2013 and 2014. The consumer price index in 2014 was
a.
145.0.
b.
147.0.
c.
135.0.
d.
133.3.
71. Suppose the price index was 100 in 2014, 109 in 2015, and the inflation rate was lower between 2015 and 2016 than it
was between 2014 and 2015. This means that
a.
the price index in 2016 was lower than 109.0.
b.
the price index in 2016 was lower than 118.9.
c.
the price index in 2016 was lower than 118.0.
d.
the inflation rate between 2015 and 2016 was lower than 1.09 percent.
72. Suppose the price index was 105 in 2017, 126 in 2018, and the inflation rate was lower between 2018 and 2019 than it
was between 2017 and 2018. This means that
a.
the price index in 2019 was lower than 126.0.
b.
the price index in 2019 was lower than 147.0.
c.
the price index in 2019 was lower than 151.2.
d.
the inflation rate between 2018 and 2019 was lower than 1.2 percent.
73. Assume an economy experienced a positive rate of inflation between 2003 and 2004 and again between 2004 and
2005. However, the inflation rate was lower between 2004 and 2005 than it was between 2003 and 2004. Which of the
following scenarios is consistent with this assumption?
a.
The CPI was 100 in 2003, 110 in 2004, and 105 in 2005.
b.
The CPI was 100 in 2003, 120 in 2004, and 135 in 2005.
c.
The CPI was 100 in 2003, 105 in 2004, and 130 in 2005.
d.
The CPI was 100 in 2003, 90 in 2004, and 88 in 2005.
74. Assume an economy experienced a positive rate of inflation between 2003 and 2004 and again between 2004 and
2005. However, the inflation rate was higher between 2004 and 2005 than it was between 2003 and 2004. Which of the
following scenarios is consistent with this assumption?
a.
The CPI was 100 in 2003, 110 in 2004, and 105 in 2005.
b.
The CPI was 100 in 2003, 120 in 2004, and 135 in 2005.
c.
The CPI was 100 in 2003, 105 in 2004, and 130 in 2005.
d.
The CPI was 100 in 2003, 90 in 2004, and 88 in 2005.
75. For an imaginary economy, the consumer price index was 80 in 2014, 100 in 2015, and 140 in 2016. Which of the
following statements is correct?
a.
If the basket of goods that is used to calculate the CPI cost $40 in 2014, then that basket of goods cost $60 in
2015.
b.
If the basket of goods that is used to calculate the CPI cost $25 in 2015, then that basket of goods cost $35 in
2016.
c.
The overall level of prices increased by 60 percent between 2014 and 2016.
d.
All of the above are correct.
76. For an imaginary economy, the consumer price index was 115.00 in 2004, 126.50 in 2005, and 136.62 in 2006. Which
of the following statements is correct?
a.
For this economy, the base year must be 2004.
b.
If the basket of goods that is used to calculate the CPI cost $75.00 in the base year, then that basket of goods
cost $115.00 in 2004.
c.
This economy’s rate of inflation for 2006 is 10.12 percent.
d.
None of the above is correct.
77. Suppose a basket of goods and services has been selected to calculate the consumer price index. In 2005, the basket of
goods cost $108.00; in 2006, it cost $135.00; and in 2007, it cost $168.75. Which of the following statements is correct?
a.
Using 2005 as the base year, the economy’s inflation rate was higher in 2007 than it was in 2006.
b.
If 2007 is the base year, then the CPI is 33.75 in 2006.
c.
If the CPI is 156.25 in 2007, then 2005 is the base year.
d.
Using 2005 as the base year, the economy’s inflation rate for 2006 was 27 percent.
Table 24-2
The table below pertains to Pieway, an economy in which the typical consumer’s basket consists of 15 bushels of peaches
and 10 bushels of pecans.
Year
Price of
Peaches
Price of
Pecans
2012
$11 per bushel
$6 per bushel
2013
$9 per bushel
$10 per bushel
78. Refer to Table 24-2. The cost of the basket in 2012 was
a.
$200.
b.
$225.
c.
$235.
d.
$212.50.
79. Refer to Table 24-2. The cost of the basket in 2013 was
a.
$200.
b.
$225.
c.
$235.
d.
$237.5.
80. Refer to Table 24-2. If 2012 is the base year, then the CPI for 2012 was
a.
95.7.
b.
100.0.
c.
90.0.
d.
110.0.
81. Refer to Table 24-2. If 2012 is the base year, then the CPI for 2013 was
a.
95.7.
b.
100.0.
c.
104.4.
d.
110.0.
82. Refer to Table 24-2. If 2013 is the base year, then the CPI for 2012 was
a.
95.7.
b.
100.0.
c.
90.0.
d.
213.6.
83. Refer to Table 24-2. If 2013 is the base year, then the CPI for 2013 was
a.
95.7.
b.
100.0.
c.
90.0.
d.
213.6.
84. Refer to Table 24-2. If 2012 is the base year, then the inflation rate in 2013 was
a.
23.5 percent.
b.
1.04 percent.
c.
10 percent.
d.
4.4 percent.
85. Refer to Table 24-2. If 2013 is the base year, then the inflation rate in 2013 was
a.
22.5 percent.
b.
2.35 percent.
c.
10 percent.
d.
4.4 percent.
Table 24-3
The table below pertains to Iowan, an economy in which the typical consumer’s basket consists of 4 pounds of pork and 3
bushels of corn.
Year
Price of
Pork
Price of
Corn
2012
$20 per pound
$12 per bushel
2013
$25 per pound
$18 per bushel
86. Refer to Table 24-3. The cost of the basket in 2012 was
a.
$108.
b.
$116.
c.
$112.
d.
$224.
87. Refer to Table 24-3. The cost of the basket in 2013 was
a.
$150.50.
b.
$147.
c.
$154.
d.
$301.
88. Refer to Table 24-3. If 2012 is the base year, then the CPI for 2012 was
a.
75.3.
b.
100.0.
c.
116.0.
d.
132.8.
89. Refer to Table 24-3. If 2012 is the base year, then the CPI for 2013 was
a.
100.0.
b.
116.0.
c.
132.8.
d.
154.0.
90. Refer to Table 24-3. If 2013 is the base year, then the CPI for 2012 was
a.
75.3.
b.
100.0.
c.
116.0.
d.
132.8.
91. Refer to Table 24-3. If 2013 is the base year, then the CPI for 2013 was
a.
75.3.
b.
100.0.
c.
116.0.
d.
132.8.
92. Refer to Table 24-3. If 2012 is the base year, then the inflation rate in 2013 was
a.
24.7 percent.
b.
54.0 percent.
c.
32.8 percent.
d.
38.0 percent.
93. Refer to Table 24-3. If 2013 is the base year, then the inflation rate in 2013 was