Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Question
Chapter 23, Problem 7MCQ
To determine
To identify:
The real wage rate when the
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Which of the following statements about the CPI is true? How does the PCEPI differ from the CPI?
The CPI _______.
A.
has a bias of approximately 2.0 percentage points a year
B.
is a measure of the change in the amount of money that people need to spend to achieve a given standard of living
C.
measures all the changes in the cost of living
D.
is a relatively useless measure because every year new goods become available and some old goods disappear
The PCEPI _______.
A.
uses the same market basket as the CPI but gives a greater weight to sticky-price items
B.
introduces even more biases into the inflation rate than the CPI
C.
excludes the prices of food and energy
D.
uses the prices of goods and services included in the consumption expenditure component of GDP
The CPI in 2021 equals _______.
A.
51.4
B.
100.0
C.
74.0
D.
194.7
If the CPI rises from 103.4 to 108.8, how much money at the start is required to have the same purchasing power as $89 at the end?
Select one:
a. $89.87
b. $93.65
c. $97.76
d. none
Check
Chapter 23 Solutions
Foundations of Economics (8th Edition)
Ch. 23 - Prob. 1SPPACh. 23 - Prob. 2SPPACh. 23 - Prob. 3SPPACh. 23 - Prob. 4SPPACh. 23 - Prob. 5SPPACh. 23 - Prob. 6SPPACh. 23 - Prob. 7SPPACh. 23 - Prob. 8SPPACh. 23 - Prob. 9SPPACh. 23 - Prob. 10SPPA
Ch. 23 - Prob. 1IAPACh. 23 - Prob. 2IAPACh. 23 - Prob. 3IAPACh. 23 - Prob. 4IAPACh. 23 - Prob. 5IAPACh. 23 - Prob. 6IAPACh. 23 - Prob. 7IAPACh. 23 - Prob. 8IAPACh. 23 - Prob. 9IAPACh. 23 - Prob. 10IAPACh. 23 - Prob. 1MCQCh. 23 - Prob. 2MCQCh. 23 - Prob. 3MCQCh. 23 - Prob. 4MCQCh. 23 - Prob. 5MCQCh. 23 - Prob. 6MCQCh. 23 - Prob. 7MCQCh. 23 - Prob. 8MCQ
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- In a simple economy, people consume only two goods: food and clothing. The market basket of goods used to compute the CPI has 50 units of food and 10 units of clothing. Food Clothing Last year's price $4 $8 This year's price $6 $16 a. What are the percentage increases in the price of food and in the price of clothing? b. What is the percentage increase in the CPI? c. Do these price changes affect all consumers to the same extent? Explainarrow_forwardRefer to the following table. Suppose the CPI basket consists of 10 pies of pizza and 20 bottles of milk respectively, and 2020 is the base year. Year Price of pizza Price of milk 2020 $250 $40 2021 $280 $45 a. Calculate the CPI in 2020 and 2021 respectively. What is the inflation rate in 2021? b. Suppose the minimum wage is $37.5 per hour in 2020, how much would it be in 2021 in order to maintain the same purchasing power in 2020? c. Which one do you think is a better measure of a household's cost of living, CPI or GDP deflator? Why?arrow_forwardIn 2007, Annie, an 80-year-old, is telling her granddaughter Mary about the good old days. Annie says that in 1932, you could buy a nice house for $17,000 and a jacket for $6. Mary says that in 2007 such a house costs $250,000 and such a jacket costs $55. The CPI in 1932 was 14.4 and in 2007 it was 207.3. ..... The house with the lower price is the. and the jacket with the lower price is the O A. $17,000 house in 1932; $55 jacket in 2007 B. $250,000 house in 2007; $6 jacket in 1932 OC. $250,000 house in 2007; $55 jacket in 2007 D. $17,000 house in 1932; $6 jacket in 1932arrow_forward
- 1. Seattle’s minimum wage for businesses with 501 employees or more as of January 2022 is $17.27 per hour (i.e., the nominal wage). If the January 2022 CPI is 281.148 according to Bureau of Labor Statistics (BLS), what is the real wage rate in 2022? Group of answer choices a. $6.14 b. $7.25 c. $16.28 d. $17.27 2. According to the circular flow diagram, if you decide to get a job and work (i.e., sell your labor) then you would go to: Group of answer choices a. factor markets b. firms c. goods market d. householdsarrow_forwardPlease answer a and barrow_forward4arrow_forward
- 16. Tuition at a major university was $10,000 in 2010. The CPI in 2010 was 218.1, and the 2018 CPI was 251.1. In 2018 dollars, this tuition is equivalent to what dollar amount?arrow_forwardPlease calculate CPI and inflation using the following basket of goods (round outlays [for calculations] and all other answers to the second decimal place when necessary) Goods Average Qty Avg. Price 2021 Clothing 15 $200 Cell Phone Plan 11 $75 Housing 10 $1,250 Milk 30 $3 Streaming Services 22 $19 Vehicle Payments 10 $450 BASE YEAR OUTLAY = $14,000.00 2020 CPI = 147 What is the 2021 CPI? What was the inflation rate from 2020 to 2021?arrow_forward
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