Tut 3: macro

 Inflation can be measured by all of the following except the

• GDP deflator.

• Consumer price index.

• Producer price index.

• Finished goods price index.

The CPI will be most influenced by a 10 percent increase in the price of which of the following consumption categories?

•  housing

•  transportation

• medical care

•  food and beverages 

  
  

In 1989, the CPI was 124.0. In 1990 it was 130.7. What was the rate of inflation over this period?

• 5.1%

• 5.4%

• 6.7%

• 30.7%

Which of the following would likely cause the CPI to rise more than the GDP deflator?

•  an increase in the price of Fords

• an increase in the price of tanks purchased by the military

• an increase in the price of domestically produced fighter planes sold exclusively to Israel

•  an increase in the price of Hondas produced in Japan and sold in the United States

• an increase in the price of Jhon Deere tractors

The “basket” on which the CPI is based is composed of

• Raw materials purchased by firms.

• Total current production.

• Products purchased by the typical consumer

•  Consumer production

If there is an increase in the price of apples that causes consumers to purchase fewer pounds of apples and more pounds of oranges, the CPI will suffer from

• substitution basis

• Bias due to the introduction of new goods.

•  Bias due to unmeasured quality change.

• Base-year bias.

Suppose your income rises from $19,000 to $31,000 while the CPI rises from 122 to 169. Your standard of living has likely

• fallen

• risen

• stayed the same

 If the nominal interest rate is 7 percent and the inflation rate is 3 percent, then the real interest rate is

•  -4 percent.

• 3 percent

• 4 percent

• 10 percent.

Which of the following statements is correct?

• The real interest rate is the sum of the nominal interest rate and the inflation rate.

• The real interest rate is the nominal interest rate minus the inflation rate.

• The nominal interest rate is the inflation rate minus the real interest rate

• The nominal interest rate is the real interest rate minus the inflation rate

If inflation is 8 percent and the real interest rate is 3 percent, then the nominal interest rate should be

• 3/8 percent.

•  5 percent.

• 11 percent.

•  24 percent