## Principles of Economics International Edition 10th Edition by Roger A. Arnold – Test Bank

Chapter 6—Macroeconomic Measurements, Part I: Prices and Unemployment

MULTIPLE CHOICE

1. The CPI was 138 in one year and 146 the following year. Approximately how much did prices rise between the two years?

a. 4.29 percent

b. 5.5 percent

c. 5.8 percent

d. 0.06 percent

ANS: C PTS: 1 DIF: Moderate NAT: Analytic

LOC: Unemployment and inflation NOT: New

2. If the CPI is 100 in the base year and 150 in the current year, how much did prices rise between these two years?

a. 50 percent

b. 150 percent

c. 1.50 percent

d. 0.15 percent

ANS: A PTS: 1 DIF: Moderate NAT: Analytic

LOC: Unemployment and inflation NOT: New

3. Suppose the market basket consists of 10X, 20Y, and 30Z. Current-year prices are $1.20 for each unit of X, $0.96 for each unit of Y, and $1.30 for each unit of Z. Base-year prices are $1.00 for each unit of X, Y, and Z. What is the approximate CPI in the current year?

a. 17

b. 70.20

c. 117

d. 270

ANS: C PTS: 1 DIF: Difficult NAT: Analytic

LOC: Unemployment and inflation

4. One measure of the inflation rate is the

a. sum of the CPIs of adjacent years.

b. percentage change in the CPI of adjacent years.

c. percentage change in the Real GDP of adjacent years.

d. GDP minus the Real GDP in a year.

ANS: B PTS: 1 DIF: Easy NAT: Analytic

LOC: Unemployment and inflation

5. Suppose there are five goods in the economy, A-E. The current-year quantity of each is 10A, 20B, 30C, 40D, and 50E. Current-year prices are $1 for each unit of A, $2 for each unit of B, $3 for each unit of C, $4 for each unit of D, and $5 for each unit of E. Base-year prices are $1 for each good. Real GDP in the current year equals

a. $100.

b. $130.

c. $150.

d. $180.

e. $550.

ANS: C PTS: 1 DIF: Difficult NAT: Analytic

LOC: Unemployment and inflation

6. In year 1 the CPI is 130.1, and in year 2 the CPI is 150. From year 1 to year 2, Martha’s salary rises from $32,000 to $35,000, and Chiang’s salary rises from $43,000 to $53,000. Who is “more than keeping up with inflation”?

a. Martha

b. Chiang

c. both Martha and Chiang

d. neither Martha nor Chiang

ANS: B PTS: 1 DIF: Difficult NAT: Analytic

LOC: Unemployment and inflation NOT: New

7. In year 1 the CPI is 144.1, and in year 2 the CPI is 161. If Sarah’s salary was $49,800 in year 1, what salary in year 2 would cause her to exactly “keep up with inflation”?

a. $34,004

b. $42,942

c. $40,508

d. $54,747

ANS: D PTS: 1 DIF: Difficult NAT: Analytic

LOC: Unemployment and inflation NOT: New

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