Eco Chpt 11

(11.1) What does CPI try to measure?

• Overall level of prices

• Price of your favorite food

• Price of the nicest cars

(11.1) The first step in calculating a CPI is to

• Get the prices

• Fix the basket

• Compute the cost of the basket

(11.1) Core CPI excludes (from CPI)

• Luxury goods

• Food and Energy

• Oil

• Money

(11.1) Which of these is not a problem with the CPI calculation method?

• Substitution bias

• More difficult to calculate than GDP deflator

• Introduction of new goods

• Unmeasured quality change

(11.2) Would you rather have 10 mil VND to spend in Ha Noi city or 10 mil VND to spend in Ba Vi?

• Ha Noi

• Ba Vi

• Same

(11.2) Would you rather have a salary that is indexed to inflation or a salary that is not?

• Indexed

• Not indexed

• It doesn't matter

A bank offers you an interest rate of 10% on money you deposit? That rate is a

• Nominal rate

• Real rate

• It depends

• Neither real nor nominal

A bank offers you an interest rate of 10$ on money you deposit? There is a 2% rate of inflation. What is the real rate?

• 10%

• 8%

• 12%

• 2%