Measuring the Cost of Living 41
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.
42 Measuring the Cost of Living
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.
Measuring the Cost of Living 43
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.
44 Measuring the Cost of Living
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.
Measuring the Cost of Living 45
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.
46 Measuring the Cost of Living
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.
Measuring the Cost of Living 47
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.
48 Measuring the Cost of Living
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.
Measuring the Cost of Living 49
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.
50 Measuring the Cost of Living
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.
Measuring the Cost of Living 51
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.
52 Measuring the Cost of Living
93. Refer to Table 24-3. If 2013 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.
Table 24-4
The table below pertains to Studious, an economy in which the typical consumer’s basket consists
of 5 books and 10 calculators.
Year
Price of a Book
Price of a
Calculator
2012
$24
$9
2013
$30
$11
2014
$32
$12
94. Refer to Table 24-4. The cost of the basket in 2012 was
a. $32.
b. $200.
c. $210.
d. $247.5.
Measuring the Cost of Living 53
95. Refer to Table 24-4. The cost of the basket
a. increased from 2012 to 2013 and increased from 2013 to 2014.
b. increased from 2012 to 2013 and decreased from 2013 to 2014.
c. decreased from 2012 to 2013 and increased from 2013 to 2014.
d. decreased from 2012 to 2013 and decreased from 2013 to 2014.
96. Refer to Table 24-4. The cost of the basket
a. increased by $8 from 2012 to 2013.
b. increased by $41 from 2012 to 2013.
c. increased by $50 from 2012 to 2013.
d. increased by $60 from 2012 to 2013.
54 Measuring the Cost of Living
97. Refer to Table 24-4. If 2012 is the base year, then the consumer price index was
a. 100 in 2012, 123.8 in 2013, and 133.3 in 2014.
b. 100 in 2012, 124.2 in 2013, and 133.3 in 2014.
c. 210 in 2012, 260 in 2013, and 280 in 2014.
d. 100 in 2012, 150 in 2013, and 170 in 2014.
98. Refer to Table 24-4. If 2013 is the base year, then the consumer price index was
a. 80.8 in 2012, 100 in 2013, and 107.7 in 2014.
b. 80.5 in 2012, 100 in 2013, and 107.3 in 2014.
c. 247.5 in 2012, 307.5 in 2013, and 330 in 2014.
d. 210 in 2012, 260 in 2013, and 280 in 2014.
99. Refer to Table 24-4. If 2014 is the base year, then the consumer price index was
a. 75 in 2012, 92.8 in 2013, and 100 in 2014.
b. 75 in 2012, 93.2 in 2013, and 100 in 2014.
c. 247.5 in 2012, 307.5 in 2013, and 330 in 2014.
d. 210 in 2012, 260 in 2013, and 280 in 2014.
Measuring the Cost of Living 55
100. Refer to Table 24–4. The inflation rate was
a. 24.3 percent in 2013 and 22.5 percent in 2014.
b. 23.8 percent in 2013 and 9.5 percent in 2014.
c. 23.8 percent in 2013 and 7.7 percent in 2014.
d. 24.3 percent in 2013 and 7.3 percent in 2014.
Table 24-5
The table below pertains to Wrexington, an economy in which the typical consumer’s basket
consists of 20 pounds of meat and 10 toys.
Year
Price of Meat
Price of a Toy
2004
$3 per pound
$2
2005
$1 per pound
$7
2006
$4 per pound
$5
101. Refer to Table 24-5. The cost of the basket in 2006 was
a. $9.
b. $130.
c. $140.
d. $270.
56 Measuring the Cost of Living
102. Refer to Table 24-5. The cost of the basket
a. increased from 2004 to 2005 and increased from 2005 to 2006.
b. increased from 2004 to 2005 and decreased from 2005 to 2006.
c. decreased from 2004 to 2005 and increased from 2005 to 2006.
d. decreased from 2004 to 2005 and decreased from 2005 to 2006.
103. Refer to Table 24-5. The cost of the basket
a. decreased by $2 from 2004 to 2005.
b. increased by $3 from 2004 to 2005.
c. increased by $7 from 2004 to 2005.
d. increased by $10 from 2004 to 2005.
104. Refer to Table 24-5. If the base year is 2004, then the CPI in 2004 was
a. 0.
b. 1.
c. 80.
d. 100.
Measuring the Cost of Living 57
105. Refer to Table 24–5. If the base year is 2004, then the CPI in 2005 was
a. 88.9.
b. 90.
c. 100.
d. 112.5.
106. Refer to Table 24-5. If the base year is 2004, then the CPI
a. increased from 2004 to 2005 and increased from 2005 to 2006.
b. increased from 2004 to 2005 and decreased from 2005 to 2006.
c. decreased from 2004 to 2005 and increased from 2005 to 2006.
d. decreased from 2004 to 2005 and decreased from 2005 to 2006.
107. Refer to Table 24-5. If the base year is 2006, then the CPI
a. increased from 2004 to 2005 and increased from 2005 to 2006.
b. increased from 2004 to 2005 and decreased from 2005 to 2006.
c. decreased from 2004 to 2005 and increased from 2005 to 2006.
d. decreased from 2004 to 2005 and decreased from 2005 to 2006.
58 Measuring the Cost of Living
108. Refer to Table 24-5. If the base year is 2004, then the inflation rate in 2006 was
a. 44.4%.
b. 50%.
c. 62.5%.
d. 80%.
109. Refer to Table 24-5. If the base year is 2006, then the inflation rate in 2005 was
a. -44.5%.
b. -30.8%.
c. 7.7%.
d. 12.5%.
110. Refer to Table 24-5. The inflation rate was
a. negative in 2005 and negative in 2006.
b. negative in 2005 and positive in 2006.
c. positive in 2005 and negative in 2006.
d. positive in 2005 and positive in 2006.
Measuring the Cost of Living 59
Table 24-6
The table below pertains to Napandsnack, an economy in which the typical consumer’s basket
consists of 2 pillows and 15 hotdogs.
Year
Price of a Pillow
Price of a Hotdog
2009
$40
$3
2010
$45
$4
2011
$50
$3
111. Refer to Table 24-6. The cost of the basket
a. increased from 2009 to 2010 and increased from 2010 to 2011.
b. increased from 2009 to 2010 and decreased from 2010 to 2011.
c. decreased from 2009 to 2010 and increased from 2010 to 2011.
d. decreased from 2009 to 2010 and decreased from 2010 to 2011.
112. Refer to Table 24-6. If the base year is 2009, then the consumer price index was
a. 100 in 2009, 115 in 2010, and 116 in 2011.
b. 100 in 2009, 115 in 2010, and 135 in 2011.
c. 100 in 2009, 120 in 2010, and 116 in 2011.
d. 120 in 2009, 125 in 2010, and 135 in 2011.
60 Measuring the Cost of Living
113. Refer to Table 24-6. If the base year is 2010, then the consumer price index was
a. 83.33 in 2009, 100.00 in 2010, and 96.67 in 2011.
b. 85.56 in 2009, 100.00 in 2010, and 102.22 in 2011.
c. 85.56 in 2009, 100.00 in 2010, and 96.67 in 2011.
d. 92.22 in 2009, 99.00 in 2010, and 95.22 in 2011.
114. Refer to Table 24-6. If the base year is 2011, then the CPI
a. increased from 2009 to 2010 and increased from 2010 to 2011.
b. increased from 2009 to 2010 and decreased from 2010 to 2011.
c. decreased from 2009 to 2010 and increased from 2010 to 2011.
d. decreased from 2009 to 2010 and decreased from 2010 to 2011.
115. Refer to Table 24-6. If the base year is 2011, then the consumer price index was
a. 125.0 in 2009, 150.0 in 2010, and 145.0 in 2011.
b. 86.2 in 2009, 96.7 in 2010, and 100.0 in 2011.
c. 86.2 in 2009, 103.4 in 2010, and 100.0 in 2011.
d. 124.1 in 2009, 103.4 in 2010, and 100.0 in 2011.