Free Printable Measuring the Cost of Living

Worksheets

Measuring the Cost of Living - B

Total questions: 7

Worksheet time: 10mins

Name

Class

Date

The CPI is a measure of the overall cost of the goods and services bought by

a typical firm.

the government.

a typical consumer.

All of the above are correct.

What basket of goods and services is used to construct the CPI?

a random sample of all goods and services produced in the economy

the goods and services that are typically bought by consumers as determined by government surveys

only food, clothing, transportation, entertainment, and education

the least expensive and the most expensive goods and services in each major category of consumer expenditures

Which of the following statements about real and nominal interest rates is correct?

Real interest rates can be either positive or negative, but nominal interest rates must be positive.

Real interest rates and nominal interest rates must be positive.

Real interest rates must be positive, but nominal interest rates can be either positive or negative.

Real interest rates and nominal interest rates can be either positive or negative.

If the nominal interest rate is 8 percent and the real interest rate is 5.5 percent, then the inflation rate is

-2.5 percent.

0.45 percent.

2.5 percent.

13.5 percent.

If the CPI is 93 in 2014 and 97 in 2015, calculate the rate of inflation from 2014 to 2015.

4.3%

4.12%

5.2%

Mance wants to borrow money, but he doesn’t want to pay more than 11%, percent real interest per year. He expects the annual rate of inflation to be 3%, percent each year during the life of the loan. Based on this information, what is the highest nominal interest that he will be willing to pay?

cannot be determined without more information

14%

Which of the following best describes the difference between nominal interest rates and real interest rates?

nominal interest rates are what banks charge; real interest is what borrowers pay

nominal interest is what you earn from a savings account; real interest is what the bank pays savings accounts

nominal interest is paid on bonds; real interest is paid on stocks

nominal interest rates are not adjusted for inflation; real interest rates are adjusted for inflation

100 %

Measuring the Cost of Living - B

Total questions: 7

Worksheet time: 10mins

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