1. You deposit​ $200 in a savings account on January​ 1, and the bank pays you interest of​ $10 at the end of the year.

During the​ year, the average price level rises by 2 percent.

The real interest rate on your savings account is​ ______.

 

 

A.

6 percent a year

B.

​$6

C.

2 percent a year

D.

3 percent a year

 

 

2. If the CPI rises from 120 to​ 126, then​ ______.

 

 

A.

on​ average, the price paid by urban consumers for a fixed basket of consumer goods and services rises by 5 percent

B.

the price of housing rises by at least 5 percent

C.

the price of food rises by 6 percent

D.

on average, the price paid by urban consumers for a fixed basket of consumer goods and services rises by 6 percent

 

 

3. The real wage rate is ​$14.00 an hour and the CPI is 114

.

What is the nominal wage​ rate?

The nominal wage rate is ___ an hour.

 

 

 

4. The reference base period for the CPI is​ 1982-1984.

In January 2001, the CPI was 202.4

.

This number tells us that the​ ______ of the prices paid by urban consumers for a fixed basket of consumer goods and services was​ ______.

 

A.

inflation​ rate; 102.4 percent per year

B.

​average; 202.4 percent higher in January 2001 than the average of​ 1982-1984

C.

inflation​ rate; 102.4 percent per year

D.

​average; 102.4 percent higher in January 2001 than the average of​ 1982-1984

 

 

 

 

5.The value of the CPI in the base period​ ______.

 

 

A.

is relevant only if the base period is within the last 10 years

B.

changes when the reference base period changes

C.

can be greater​ than, equal​ to, or less than 100

D.

is 100 no matter what reference base period is chosen

 

6. The CPI basket consists of items that​ ______ buy and it is updated frequently to​ ______.

 

 

A.

urban​ households; permit​ long-term price comparisons on individual goods

B.

all​ households; eliminate bias

C.

urban​ households; reduce bias

D.

all​ households; provide a valid comparison with​ 1982-1984

 

 

 

 

7.In the United States in 2004​, nominal GDP was $ 11 comma 667 billion and real GDP was $ 10 comma 704 billion.

What is the value of the GDP deflator in 2004?