Suppose a basket of goods and services has been selected to calculate the CPI an

Question

Suppose a basket of goods and services has been selected to calculate the CPI and 2009 has been selected as the base year. In 2007, the basket's cost was $64; in 2009, the basket's cost was cost $68; and in 2011, the basket's cost was $70. The value of the CPI in 2011 was A. 100.10. B. 97.14. C. 102.94. D. 109.38. When the quality of a good improves while its price remains the same, the purchasing power of dollar A. increases, so the CPI understates the change in the cost of living if the quality change is not accounted for. B. decreases, so the CPI understates the change in the cost of living if the quality change is not accounted for. C. decreases, so the CPI overstates the change in the cost of living if the quality change is not accounted for. D. increases, so the CPI overstates the change in the cost of living if the quality change is not accounted for. If the price of Italian shoes imported into the United States increases, then A. both the GDP deflator and the consumer price index will increase. B. neither the GDP deflator nor the consumer price index will increase. C. the GDP deflator will increase, but the consumer price index will not increase. D. the consumer price index will increase, but the GDP deflator will not increase. Janelle earned a salary of $40,000 in 1996 and $65,000 in 2006. The consumer price index was 160 in 1996 and 266 in 2006. Janelle's 2006 salary in 1996 dollars is A. $39,097.74. B. $68,900.00. C. $43,062.50. D. $108,062.50. Efficiency wages A. increase productivity and reduce unemployment. B. increase productivity but increase unemployment. C. decrease productivity but reduce unemployment.

Explanation / Answer

8d) increases, so the cpi overstates the change in cost of living is the quality is not accounted for.

9.a both the GDP deflator and the consumer price index will increase.

10.a $39,097.74

11b) efficiency wages is wage above the market clearing level of wage where excess demand of labour=excess supply ie there no unemployement.Employers prefer efficiency wage as it increases productivity. But as wage increases there occurs excess supply of labour so which causes unemployment to rise.

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.