BR13B: Bridge: Inflation
Question 1
Suppose that the consumer price index in Eastlandia rises from 150 to 159 over the past year, and that the city sets its car registration prices so that real prices stay the same. If the cost to register a car was \$50 last year, how much would it cost this year, in nominal terms?
A. \$53
B. \$50
C. \$59
D. \$56
Answer
A. \$53Question 2
If a bundle of goods used to calculate the consumer price index rises from \$80 to \$86 over a one year period, what is the inflation rate of that year?
A. 7.5%
B. 10%
C. 6.0%
D. 6.9%
Answer
A. 7.5%Question 3
Which of the following is least likely to result in inflation?
A. A drought in California causing farm production to fall.
B. Rising instability in oil-producing nations.
C. A reduction in consumer confidence in the economy.
D. The government printing money to finance deficits.
Answer
C. A reduction in consumer confidence in the economy.Question 4
From 2015 to 2016, the overall price level rose from 200 to 220. Over this same period, tuition rates at the local community college rose from \$100 to \$115 per credit hour. What can be concluded from the rise in tuition relative to overall inflation?
A. Tuition rates and inflation cannot be compared with the numbers given.
B. Tuition rates increased at the same rate as inflation.
C. Tuition rates increased at a faster rate than inflation.
D. Tuition rates increased at a slower rate than inflation.
Answer
C. Tuition rates increased at a faster rate than inflation.Question 5
If the inflation rate was 1% in 2014, 3% in 2015, and 2% in 2016, this economy experienced ____ from 2014 to 2015, and ____ from 2015 to 2016.
A. inflation; deflation
B. disinflation; deflation
C. inflation; inflation
D. inflation; disinflation