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Lecture

# Chapter6-+problem+set.pdf

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School
Department
Economics
Course
ECON 102
Professor
Richard Ennis
Semester
Summer

Description
Chapter 6Measuring the Cost of Living1Which of the following is the consumer price index used for a to track changes in the level of wholesale prices in the economy b to monitor changes in the cost of living c to monitor changes in the level of real GDP d to track changes in the stock market 2 Which of the following best defines the inflation rate a the price level b the change in the price level c the price level divided by the price level in the previous period d the percentage change in the price level from the previous period 3 What does the CPI measure a the overall price of inputs purchased by a typical producer b the overall price of goods and services bought by a typical consumer c the overall price of goods and services produced in the economy d the overall price of stocks on the Toronto Stock Exchange4What is the basket of goods used to construct the CPI a a random sample of all goods and services produced in the economy b the goods and services typically bought by consumers according to Statistics Canada surveys c goods and services weighted by the ratio of expenditures on them relative to the consumption component of GDP d the least and the most expensive goods and services in each major category of consumer expenditures 5How are the weights on the various goods and services in the CPI basket determined a Each good and service is weighted according to its quantity 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 priceTable 61 year peaches pecans 2010 14 per bushel 9 per bushel 2011 12 per bushel 14 per bushel 6 Refer to Table 61 Suppose that the typical consumer basket consists of 5 bushels of peaches and 10 bushels of pecans and that the base year is 2010 What is the consumer price index for 2010 a 100 b 160 c 200 d There is insufficient information to answer this question
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