MACRO Inflation QUIZ CHPT 9 – Flashcards
Unlock all answers in this set
Unlock answersquestion
In 2016, people receiving Social Security will receive ______________in their benefits.
answer
no increase
question
Which of the following would be the best measure of the cost of living?
answer
Consumer Price Index
question
The real wage equals the nominal wage ____ the CPI, all time 100
answer
divided by
question
You lend $5,000 to a friend for one year at a nominal interest rate of 10%. Inflation during that year is 5%, As a result, you will receive______ at the end of the year, but that money has a purchasing power of ______.
answer
$5,500; $5,250
question
Using the following data what was the inflation rate for 2008
answer
3.9%
question
For any given year, the CPI is the price of the basket of goods and services in the
answer
given year divided by the price of the basket in the base year times 100
question
Suppose that in 2013, all prices in the economy double and that all wages and salaries have also doubled. In 2013 you
answer
were NO BETTER or WORSE OFF than you were in 2010 as the purchasing power of your salary has remained the same
question
The substitution bias in the CPI refers to the idea that consumers ______the quantity of products they buy in response to price, and the CPI does not reflect this and____the cost of the market basket.
answer
change; over-estimates
