CPI, Market Basket, Calculation,

When Inflation occurs,

• Price decreases in the economy
• The purchasing power of money decreases in the economy
• The dollar appreciates on foreign exchange markets
• Basic necessities become cheaper

Which of these are likely to be winners in periods of high, unanticipated inflation?

• Savers
• Lenders
• Borrowers at fixed interest rates
• People on fixed incomes

Which of these are likely to be losers in periods of high, unanticipated inflation? 

• Minimum wage workers who do not receive raises
• Households with large mortgages
• A business that has borrowed from a bank at a fixed rate of interest
• Businesses that have agreed to pay workers low-COLA wages

Hyper inflation occurs when

• Real GDP decreases at the same time inflation is increasing
• Unemployment, Real GDP, and inflation decrease together
• Real GDP increases at the same time inflation is decreasing
• Inflation increases by a large amount in a short time period.

Comparing the cost of two markets baskets of goods allows an economist to determine

• The Producer Price Index
• The Consumer Price Index
• The current direction of GDP
• How much unemployment is in the economy

If one wanted to know whether there had been inflation or not, the BEST measure to observe would be the

• GDP
• Business cycle
• CPI
• National Dept

Which year is the base year?
1997 CPI = 95
1998 CPI = 97
1999 CPI = 100
2000 CPI = 104

• 1997
• 1998
• 1999
• 2000

Did prices go up or down in 2009?
2008 CPI = 212
2009 CPI = 214

• Up
• Down

If the Price of the Market Basket in 2008 is $40 and the Price of the Market Basket in the base year is $20, what is the CPI for 2008?

• 2
• 60
• 80
• 200

Money loses its value when it

• It becomes too plentiful
• becomes too portabale
• is divisible
• is durable