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University of Waterloo
ECON 102
Richard Ennis

Chapter 6Measuring the Cost of Living1Which of the following is the consumer price index used forato track changes in the level of wholesale prices in the economybto monitor changes in the cost of livingcto monitor changes in the level of real GDPdto track changes in the stock market2 Which of the following best defines the inflation rateathe price levelbthe change in the price levelcthe price level divided by the price level in the previous perioddthe percentage change in the price level from the previous period3 What does the CPI measureathe overall price of inputs purchased by a typical producerbthe overall price of goods and services bought by a typical consumercthe overall price of goods and services produced in the economydthe overall price of stocks on the Toronto Stock Exchange4What is the basket of goods used to construct the CPIaa random sample of all goods and services produced in the economybthe goods and services typically bought by consumers according to Statistics Canada surveyscgoods and services weighted by the ratio of expenditures on them relative to the consumption component of GDPdthe least and the most expensive goods and services in each major category of consumer expenditures5How are the weights on the various goods and services in the CPI basket determinedaEach good and service is weighted according to its quantitybA survey is conducted to determine how much of each good and service typical consumers purchasecThe weights equal the ratio of expenditures on each good or service divided by the total consumption expenditures in the GDP accountsdEach good and service is weighted according to its priceTable 61yearpeachespecans201014 per bushel9 per bushel201112 per bushel14 per bushel6 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 2010a100b160c200
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