Economics DeMYSTiFieD by Melanie Fox & Eric R. Dodge

Author:Melanie Fox & Eric R. Dodge
Language: eng
Format: mobi, epub
Publisher: McGraw-Hill Companies,Inc.
Published: 2012-07-25T22:00:00+00:00

QUIZ

Is each of the following statements true or false? Explain.

1. Deflation is a desirable alternative to inflation.

2. The Consumer Price Index measures the increases in prices of all goods and services produced in an economy.

3. To calculate the rate of inflation between any two years, you subtract the CPI in one year from the CPI in the previous year.

4. The rate of inflation from year to year will not change significantly if you change the base year, but the values of the CPI in each year will change.

5. When the rate of inflation is higher than expected, borrowers are better off and lenders are worse off.

Give a short answer for each of the following questions.

For questions 6 through 8, consider the following facts about the Nation of Maxistan. The typical consumer in Maxistan consumes a basket of goods consisting of 2 pounds of sliced ham, 1 case of bottled water, 6 magazines, and 4 hours of babysitting. A survey of prices for a four-year period is given in Table 13-8.

TABLE 13-8

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