Economics Cpi Market Quiz

13 Questions | By Tjohnston523 | Last updated: Mar 22, 2022 | Total Attempts: 142

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1.

The Idea of diminishing returns means that Real GDP _______ as the quantity of labor increases.
- A.
  
  Does not change
- B.
  
  Decreases at a slower rate
- C.
  
  Increases at a slower rate
- D.
  
  Decreases at a faster rate
- E.
  
  Increases at a faster rate
2.

The consumer price index measures the average of the prices by urban customers for a _______ of consumer goods and services.
- A.
  
  Fixed Market Basket
- B.
  
  Random Selection
- C.
  
  Subjective Selection
- D.
  
  Least-cost market basket
- E.
  
  Changing Selection
3.

The value of the CPI for the reference period is always
- A.
  
  100
- B.
  
  0
- C.
  
  50
- D.
  
  10
- E.
  
  None of the above we do not know
- F.
  
  None of the above we do not know
4.

Joe buys chicken and beef. If the price of beef rises and the price of chicken does not change. Joe will buy ______ for the CPI.
- A.
  
  At the same quantity of beef and chicken and create a commodity substitution bias
- B.
  
  More beef and crease a quality change bias
- C.
  
  More chicken and create a commodity substitution bias
- D.
  
  More chicken and eliminate the commodity substitution bias
- E.
  
  Less chicken and beef and crease a quality change bias
5.

The production function graphs the relationship between
- A.
  
  Real GDP and the quantity of labor employed
- B.
  
  Nominal GDP and Real GDP
- C.
  
  Real GDP and capital
- D.
  
  Nominal GDP and the quantity of labor employed
- E.
  
  Real GDP and the supply of labor
6.

Consumers in Beachland consume only two goods, sodas, and DVDs. If they spend $10 on sodas and $90 on DVDs a month, how many sodas and DVDs are in their CPI market basket if the price of a soda is $1 and the price of a DVD is $9?
- A.
  
  1 Soda and 9 DVDs
- B.
  
  It is impossible to determine the market basket without more information
- C.
  
  9 Sodas and 1 DVD
- D.
  
  10 Sodas and 10 DVDs
- E.
  
  10 Sodas and 9 DVDs
7.

A formula for the CPI is
- A.
  
  (Cost of CPI market basket at current period prices / Cost of CPI market base at base period prices) x 100
- B.
  
  (Cost of CPI market basket this year x Cost of CPI market basket at base period prices) / 100
- C.
  
  (Cost of CPI market basket at base period prices / Cost of CPI market basket at current period prices) x 100
- D.
  
  (Cost of CPI market basket at current period prices / Cost of CPI market basket at next year's prices) x 100
8.

If the price index was 100 last year and today it is 167, what is the inflation rate over this period?
- A.
  
  67 percent
- B.
  
  167 percent
- C.
  
  -67 percent
- D.
  
  -6.7 percent
9.

If the cost of the CPI market basket at current period prices is $1000 and the cost of the CPI market basket at base period prices is $250, the CPI is
- A.
  
  400
- B.
  
  100
- C.
  
  250
- D.
  
  2.50
- E.
  
  4.0
10.

An example of the new goods bias in the calculation of the CPI is a price increase in
- A.
  
  Butter relative to margarine
- B.
  
  A Caribbean cruise for a couple who has never been on a cruise before
- C.
  
  An iPod player relative to a walkman
- D.
  
  A 2013 Honda Civic Si Coupe relative to a 2013 Honda Civic Si Sedan
11.

Job rationing occurs when the real wage rate is
- A.
  
  Below the equilibrium wage rate so there is an excess supply of labor
- B.
  
  Above the equilibrium wage rate so there is an excess supply of labor
- C.
  
  Equal to the equilibrium wage rate so there is no excess supply of labor
- D.
  
  Above the equilibrium wage rate so there is a shortage of labor
- E.
  
  Both answers A and D are correct because whenever the real wage rate is above or below the equilibrium wage rate, there is an excess supply of labor
12.

If New Zealand is operating at potential GDP, which of the following is true?i) New Zealand only has frictional and structural unemploymentii) There is no inflation in New Zealandiii) New Zealnds has positive net exports
- A.
  
  I only
- B.
  
  I and iii
- C.
  
  I and ii
- D.
  
  Ii only
- E.
  
  I, ii, and iii
13.

The level of real GDP the economy produces at full employment is called
- A.
  
  Potential GDP
- B.
  
  Lucas GDP
- C.
  
  Sustainable GDP
- D.
  
  Nominal GDP
- E.
  
  Maximum GDP