Name: ________________________ Class: ___________________ Date: __________ ID: A
1
MacPrin-quiz-ch.11
Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.
____ 1. The consumer price index is used to
a. track changes in the level of wholesale prices in the economy.
b. monitor changes in the cost of living.
c. monitor changes in the level of real GDP.
d. track changes in the stock market.
____ 2. Which goods are supposed to be included in the CPI?
a. all goods and services produced in the economy
b. all goods and services that typical consumers buy
c. all goods and services in the consumption component of the GDP accounts
d. all the goods, but not the services, in the consumption component of the GDP accounts
____ 3. How are the weights on the various goods and services in the CPI basket determined?
a. All goods and services are weighted equally.
b. A survey is conducted to determine how much of each good and service typical
consumers purchase.
c. the weights equal the ratio of expenditures on each good or service divided by the total
consumption expenditures in the GDP accounts.
d. Each good and service is weighted according to its price.
Use the table below to answer the following questions.
Table 11-2
year price of pork price of corn
2003 $20 $20
2004 $20 $30
____ 4. Refer to Table 11-2. Suppose that the basket of goods in the CPI consisted of 3 units of pork and 2 units of
corn. What is the consumer price index for 2004 if the base year is 2003?
a. 100
b. 105
c. 115
d. 120
____ 5. The market basket used to calculate the CPI in Aquilonia is 4 loaves of bread, 6 gallons of milk, 2 shirts and 2
pants. In 2001 bread cost $1.00 per loaf, milk cost $1.50 per gallon, shirts cost $6.00 each and pants cost
$10.00 per pair. In 2002 bread cost $1.50 per loaf, milk cost $2.00 per gallon, shirts cost $7.00 each and pants
cost $12.00 per pair. What was the inflation rate, as measured by the CPI, for Aquilonia between 2001 and
2002?
a. 30 percent
b. 24.4 percent
c. 21.6 percent
d. It is impossible to determine without knowing the base year.
