Question 1

The best price index to use in calculating real GDP is

Accepted Answer

A)  Any of the indexes because they all reflect price level changes.
B)  The CPI.
C)  The PPI.
D)  The GDP deflator.E) A) and B)
F) B) and C)

Question 2

Your real income is

Accepted Answer

A)  The amount of money you receive during a given time period.
B)  Measured in current dollars.
C)  The purchasing power of the money you receive.
D)  The same as your nominal income in times of high inflation.E) A) and B)
F) A) and C)

Question 3

The core inflation rate involves all price changes including food and energy.

Accepted Answer

A) True 
 B)False

Question 4

All of the following statements about inflation in the United States are correct except

Accepted Answer

A)  Since the Great Depression,average prices have risen almost every year.
B)  The inflation rate was 13.5 percent in 1980.
C)  Prior to World War II,the United States experienced periods of both deflation and inflation.
D)  Inflation was at its worst during the Great Depression.E) A) and C)
F) B) and C)

Question 5

If deflation is 0.5 percent per year and you receive a 1 percent decrease in your salary,then your

Accepted Answer

A)  Real income falls,but your nominal income remains unchanged.
B)  Real and nominal income both fall.
C)  Real income remains unchanged,but your nominal income rises.
D)  Real and nominal income both rise.E) B) and D)
F) A) and D)

Question 6

If the price level is falling,all of the following are true except

Accepted Answer

A)  Lenders are better off.
B)  Businesses are reluctant to borrow money.
C)  Purchasing power increases.
D)  Borrowers are not affected.E) B) and C)
F) A) and D)

Question 7

If the economy is producing at capacity and consumers are willing and able to buy more even more goods,this may cause

Accepted Answer

A)  Demand-pull inflation.
B)  Cost-push inflation.
C)  Supply-side inflation.
D)  The price effect.E) A) and C)
F) A) and B)

Question 8

If your rent increases from $1,000 to $1,100 over a period of one year and your income rises from $6,000 to $7,000,your nominal income has

Accepted Answer

A)  Increased,but your real income has decreased.
B)  Increased,and your real income has increased.
C)  Decreased,and your real income has decreased.
D)  Increased,but your real income has remained the same.E) B) and C)
F) A) and D)

Question 9

A mortgage that adjusts the nominal interest rate to changing rates of inflation is

Accepted Answer

A)  An ARM.
B)  A PPI.
C)  A GDM.
D)  A COLA.E) None of the above
F) B) and C)

Question 10

The real interest rate is

Accepted Answer

A)  The difference between the prime rate and the rate charged by the government (the Federal Reserve) on loans.
B)  The nominal interest rate minus the anticipated rate of inflation.
C)  The inflation rate minus the percentage increase in average wages.
D)  The sum of inflation rates and unemployment rates.E) All of the above
F) B) and C)

Question 11

All of the following are microeconomic consequences of inflation except

Accepted Answer

A)  A price effect.
B)  An income effect.
C)  A wealth effect.
D)  A profit effect.E) A) and C)
F) A) and D)

Question 12

If nominal GDP is $9,600 billion and the GDP deflator is 118.5,real GDP is

Accepted Answer

A)  $6,586.7 billion.
B)  $10,852.7 billion.
C)  $3,657.0 billion.
D)  $8,101.3 billion.E) None of the above
F) A) and B)

Exam 7: Inflation

The core inflation rate involves all price changes including food and energy.

Correct Answer
verified

A mortgage that adjusts the nominal interest rate to changing rates of inflation is

Correct Answer
verified

If the economy is producing at capacity and consumers are willing and able to buy more even more goods,this may cause

Correct Answer
verified

If nominal GDP is $9,600 billion and the GDP deflator is 118.5,real GDP is

Correct Answer
verified

Your real income is

Correct Answer
verified

All of the following statements about inflation in the United States are correct except

Correct Answer
verified

If your rent increases from $1,000 to $1,100 over a period of one year and your income rises from $6,000 to $7,000,your nominal income has

Correct Answer
verified

If deflation is 0.5 percent per year and you receive a 1 percent decrease in your salary,then your

Correct Answer
verified

The real interest rate is

Correct Answer
verified

If the price level is falling,all of the following are true except

Correct Answer
verified

The best price index to use in calculating real GDP is

Correct Answer
verified

All of the following are microeconomic consequences of inflation except

Correct Answer
verified

Exam 7: Inflation

The core inflation rate involves all price changes including food and energy.

Correct AnswerverifiedShow Answer

A mortgage that adjusts the nominal interest rate to changing rates of inflation is

Correct AnswerverifiedShow Answer

If the economy is producing at capacity and consumers are willing and able to buy more even more goods,this may cause

Correct AnswerverifiedShow Answer

If nominal GDP is $9,600 billion and the GDP deflator is 118.5,real GDP is

Correct AnswerverifiedShow Answer

Your real income is

Correct AnswerverifiedShow Answer

All of the following statements about inflation in the United States are correct except

Correct AnswerverifiedShow Answer

If your rent increases from $1,000 to $1,100 over a period of one year and your income rises from $6,000 to $7,000,your nominal income has

Correct AnswerverifiedShow Answer

If deflation is 0.5 percent per year and you receive a 1 percent decrease in your salary,then your

Correct AnswerverifiedShow Answer

The real interest rate is

Correct AnswerverifiedShow Answer

If the price level is falling,all of the following are true except

Correct AnswerverifiedShow Answer

The best price index to use in calculating real GDP is

Correct AnswerverifiedShow Answer

All of the following are microeconomic consequences of inflation except

Correct AnswerverifiedShow Answer

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