Economics For Today
10th Edition
ISBN: 9781337613040
Author: Tucker
Publisher: Cengage Learning
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Question
Chapter 17, Problem 19SQ
To determine
The increase in gasoline price and reduction in consumption.
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Question 1
1.a) When inflation occurs, all prices rise together at the same rate.
True
False
1.b) To calculate the consumer price index, the basket price in the current year is divided by the
a.GDP deflator
b.inflation rate
c.basket price in the base year
1.c) Milton Friedman said that inflation is always and everywhere caused by
a.printing money
b.minimum wages
c.too much government spending
What type of bias might be introduced if the CPI only represents the change in the price of a gallon of gas?
A. new goods bias
B. quality change bias
C. commodity substitution bias
D. outlet substitution bias
Three problems that make the consumer price index an imperfect measure of the cost of living are
Chapter 17 Solutions
Economics For Today
Ch. 17.2 - Prob. 1GECh. 17.2 - Prob. 2GECh. 17.2 - Prob. 1YTECh. 17.2 - Prob. 2YTECh. 17 - Prob. 1SQPCh. 17 - Prob. 2SQPCh. 17 - Prob. 3SQPCh. 17 - Prob. 4SQPCh. 17 - Prob. 5SQPCh. 17 - Prob. 6SQP
Ch. 17 - Prob. 7SQPCh. 17 - Prob. 8SQPCh. 17 - Prob. 9SQPCh. 17 - Prob. 10SQPCh. 17 - Prob. 11SQPCh. 17 - Prob. 1SQCh. 17 - Prob. 2SQCh. 17 - Prob. 3SQCh. 17 - Prob. 4SQCh. 17 - Prob. 5SQCh. 17 - Prob. 6SQCh. 17 - Prob. 7SQCh. 17 - Prob. 8SQCh. 17 - Prob. 9SQCh. 17 - Prob. 10SQCh. 17 - Prob. 11SQCh. 17 - Prob. 12SQCh. 17 - Prob. 13SQCh. 17 - Prob. 14SQCh. 17 - Prob. 15SQCh. 17 - Prob. 16SQCh. 17 - Prob. 17SQCh. 17 - Prob. 18SQCh. 17 - Prob. 19SQCh. 17 - Prob. 20SQ
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Similar questions
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- Explain what is the relationship between the consumer price index and the inflation rate.arrow_forwardWhat is the effect of the sources of bias on the CPI calculation? A. Changes in relative prices lead consumers to change the items they buy, and the CPI reflects this substitution. B. The new goods bias injects a downward bias into the CPI. C. When faced with higher prices, people use discount stores more frequently and convenience stores less frequently, but the CPI doesn't include this outlet substitution. D. When the quality of a good improves over time, the CPI doesn't include the portion of the price rise attributable to the higher quality in its calculation.arrow_forward(Problems with the CPI)The importance of the bias in the U.S. consumer price index is reviewed in an article in the June 1997 issue of Finance and Development from the International Monetary Fund at http://www.imf.org/external/ pubs/ft/fandd/1997/06/pdf/armknech.pdf.Tao Wu of the Federal Reserve Bank of San Francisco discusses current issues with the calculation of the consumer price index at http://www.frbsf.org/publications/economics/letter/ 2003/el2003-24.html.What are the criticisms of the CPI as it is now calculated?arrow_forward
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