CPI
Understanding CPI and Inflation Quiz
Test your knowledge of the Consumer Price Index (CPI) and inflation with this engaging quiz! Dive into the key concepts that influence our economy, from price measurement to interest rates.
- 10 multiple-choice questions
- Assess your understanding of CPI
- Get insights into inflation and interest rates
If you want to calculate the rate of price for inflation for all goods produced in a nation you would use CPI
True
False
CPI and GDP formula is the same (nominal and real)
True
False
Inflation happens when government supply too much money in the nation
True
False
What basket of goods and services used to measure CPI
Random of goods and services produced in economy
Food, clothing, transportation, entertainment, education
Goods and services bought by typical consumers surveyed by government
Suppose that the price of a product has risen relatively than general in these several years. Which causes the problem of CPI
Substitution bias
The introduction of new goods
Unmeasured quality
Inflation
Suppose that the CPI in 2000 is 165, and 215 in 2005. Calculate the inflation rate
50%
50
30%
No correct answer
Which of the following statements about real and nominal interest rates is correct?
Real interest rates can be either positive or negative, but nominal interest rates must be positive
Real interest rates and nominal interest rates must be positive.
Real interest rates must be positive, but nominal interest rates can be either positive or negative
Real interest rates and nominal interest rates can be either positive or negative
Because the CPI is based on a fixed basket of goods, the introduction of new goods and services in the economy causes the CPI to overestimate the cost of living. This is so because
New goods and services are always of higher quality than existing goods and services.
New goods and services cost less than existing goods and services.
New goods and services cost more than existing goods and services
When a new good is introduced, it gives consumers greater choice, thus reducing the amount they must spend to maintain their standard of living
If the nominal interest rate is 10% and the inflation rate is 6%. The real interest rate is
6%
4%
16%
10%
In 1990, John's salary was $200 with the CPI of 120, but in 2020 John's salary is $500 with the CPI of 270. He is better off in 2020
True
False
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