ECO 6213 Ch 16&18

The Consumer Price Index is calculated by the

• Bureau of Labor Statistics.

• Department of Labor.

• Department of Commerce.

• Federal Reserve Bank of New York.

• Society for Consumer Protection.

The reference base period that the BLS uses to measure the CPI is

• 1993-1995.

• 1998-2000.

• 1982-1984.

• 1967-1969.

When the CPI rises ________, the inflation rate is ________.

• steadily; zero

• rapidly; high

• slowly; high

• rapidly; low

• rapidly; either high, low, or zero depending on whether production of output is increasing, decreasing, or not changing.

Suppose the CPI for this year is 133.7. This number means that

• on average, goods cost $133.70 each this year.

• prices rose 33.7 percent over the last year.

• prices rose 133.7 percent over the base year.

• prices rose 133.7 percent over the last year.

• prices rose 33.7 percent over the base year.

When a good gets better from one year to the next, the CPI has a what is called

• new goods bias.

• quality change bias.

• commodity substitution bias.

• outlet substitution bias.

• magnitude of change bias.

In June 1960, the price of gasoline in the Midwest was $0.169 per gallon and the CPI was 29.6 with a base period of 1982 to 1984. What was the real price of gasoline per gallon in base period dollars?

• $0.05 per gallon

• $0.057 per gallon

• $0.169 per gallon

• $0.571 per gallon

Which statement most accurately captures the state of money today?

• Money today includes currency, bank deposits and checks.

• Money today includes currency and checks but not bank deposits.

• Money today includes bank deposits and currency but not checks.

• Money today includes checks and credit cards.

Because the Federal Reserve System is a central bank, it provides banking services to

• businesses only.

• consumers and business.

• commercial banks.

• no one.

• the government only.

The four main policy tools the Federal Reserve System uses to influence the interest rate are setting

• the discount rate, open market operations, extraordinary crisis measures and setting the required reserve ratio.

• quantitative easing, market interest rate and the discount rate, as well as open market operations.

• the prime rate, open market operations, extraordinary crisis management and setting the excess reserve ratio.

• quantitative easing, open market operations, setting tax rates, and setting the required reserve ratio.

The discount rate is

• the interest rate paid when a bank borrows reserves from another bank.

• the interest rate paid when a commercial bank borrows reserves from the Fed.

• the reduction in the interest rate given to the bank's best customers.

• another name for the long-term interest rate.