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When the consumer price index rises, the typical family has to? 
 
a) spend more dollars to maintain the same standard of living. 
b) spend fewer dollars to maintain the same standard of living.
c) finds that its standard of living is not affected.
d) can offset the effects of rising prices by saving more

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Vaishnavi Kanukurti
Vaishnavi KanukurtiLv10
11 Sep 2020

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Related questions

TRUE or FALSE?

1. When the consumer price index falls, the typical family has to spend fewer dollars to maintain the same standard of living.

2. Economists use the term inflation to describe a situation in which the economy's overall price level is rising.

3. When a new good is introduced, consumers have more variety from which to choose, and this, in turn, increases the cost of maintaining the same level of economic well-being.

4. The real interest rate is the interest rate corrected for inflation.

5. Like physical capital, human capital is a produced factor of production.

 

1. The peak of the business cycle

a. usually occurs when the natural rate of unemployment is equal to its actual rate.

b. is the point where an expansion ends and a recession begins

c. is the minimum level of nominal GDP.

2. The consumer price index (CPI) reflects

a. the median annual expenditures of a typical single family of four on consumer goods

b. the average price of all goods and services computed from the ratio of nominal GDP to real GDP.

c. the changes in the prices of goods and services typically purchased by consumers.

3. The Consumer Price Index is NOT used

a. to measure the average price level of all final goods and services produced

b. to compute the U.S. inflation rate.

c. to measure changes in the cost of living

4. Which of the following is true of a price index that uses a fixed market basket?

a. It excludes new goods and services

b. It accurately predicts the impact of rising prices when purchases are made at superstores.

c. It overstates the importance of items that fall in price.

5. A quality-change bias in the construction of the CPI arises because

a. big box stores that carry electronic goods routinely run sales to reduce their inventories before stocking new models.

b. consumers also shop at superstores or outlet stores

c. newer versions of a product might be more expensive but could also be better than the older version.

Which of the following choices correctly illustrates how changes in opportunity costs affect supply?
 
a. A farmer produces corn and wheat. The price of wheat rises, so he shifts his resources towards wheat. 
b. A fisherman fishes for lobsters and oysters. The price of lobsters rises, so he decides to spend more of his time fishing for oysters because he can make the same amount of money with fewer lobsters. 
c. A textbook for economics becomes cheaper, so more students opt to buy that particular textbook. 
d. Milk and cereal are complementary goods, so when the price of cereal falls, the quantity supplied of milk rises. 
 
d. A low price signals to consumers that they should buy a good.

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