ECN 211 Exam 2 Study Guide 2026 | Economics Review, Practice Questions &
Test Prep
Consider a small economy in which consumers buy only two goods: apples and pears. In order
to compute the consumer price index for this economy for two or more consecutive years, we
assume that
A) neither the number of apples nor the number of pears bought by the typical consumer
changes from year to year.
B) neither the price of apples nor the price of pears changes from year to year.
C) the number of apples bought by the typical consumer is equal to the number of pears bought
by the typical consumer in each year.
D) the percentage change in the price of apples is equal to the percentage change in the price of
pears from year to year. - ANS ✔✔Answer - neither the number of apples nor the number of
pears bought by the typical consumer changes from year to year.
The consumer price index is used to
A) monitor changes in the level of real GDP over time.
B) monitor changes in the stock market.
C) monitor changes in the level of wholesale prices in the economy.
, D) monitor changes in the cost of living over time. - ANS ✔✔Answer - monitor changes in the
cost of living over time.
Suppose that over the past year, the real interest rate was 6 percent and the inflation rate was 4
percent. It follows that
A) the dollar value of savings increased at 10 percent, and the purchasing power of savings
increased at 2 percent.
B) the dollar value of savings increased at 6 percent, and the purchasing power of savings
increased at 2 percent.
C) the dollar value of savings increased at 10 percent, and the purchasing power of savings
increased at 6 percent.
D) the dollar value of savings increased at 6 percent, and the purchasing power of savings
increased at 10 percent. - ANS ✔✔Answer - the dollar value of savings increased at 10 percent,
and the purchasing power of savings increased at 6 percent.
If 2010 is the base year, then the inflation rate in 2015 equals - ANS ✔✔Answer -
(CPI in 2015 - CPI in 2014/ CPI in 2014) x 100
Corey deposits $1,000 in a savings account that pays an annual interest rate of 5 percent. Over
the course of a year, the inflation rate is 1.7 percent. At the end of the year, Corey has
A) $30 more in his account, and his purchasing power has increased by $50.
B) $50 more in his account, and his purchasing power has increased by $33.
Test Prep
Consider a small economy in which consumers buy only two goods: apples and pears. In order
to compute the consumer price index for this economy for two or more consecutive years, we
assume that
A) neither the number of apples nor the number of pears bought by the typical consumer
changes from year to year.
B) neither the price of apples nor the price of pears changes from year to year.
C) the number of apples bought by the typical consumer is equal to the number of pears bought
by the typical consumer in each year.
D) the percentage change in the price of apples is equal to the percentage change in the price of
pears from year to year. - ANS ✔✔Answer - neither the number of apples nor the number of
pears bought by the typical consumer changes from year to year.
The consumer price index is used to
A) monitor changes in the level of real GDP over time.
B) monitor changes in the stock market.
C) monitor changes in the level of wholesale prices in the economy.
, D) monitor changes in the cost of living over time. - ANS ✔✔Answer - monitor changes in the
cost of living over time.
Suppose that over the past year, the real interest rate was 6 percent and the inflation rate was 4
percent. It follows that
A) the dollar value of savings increased at 10 percent, and the purchasing power of savings
increased at 2 percent.
B) the dollar value of savings increased at 6 percent, and the purchasing power of savings
increased at 2 percent.
C) the dollar value of savings increased at 10 percent, and the purchasing power of savings
increased at 6 percent.
D) the dollar value of savings increased at 6 percent, and the purchasing power of savings
increased at 10 percent. - ANS ✔✔Answer - the dollar value of savings increased at 10 percent,
and the purchasing power of savings increased at 6 percent.
If 2010 is the base year, then the inflation rate in 2015 equals - ANS ✔✔Answer -
(CPI in 2015 - CPI in 2014/ CPI in 2014) x 100
Corey deposits $1,000 in a savings account that pays an annual interest rate of 5 percent. Over
the course of a year, the inflation rate is 1.7 percent. At the end of the year, Corey has
A) $30 more in his account, and his purchasing power has increased by $50.
B) $50 more in his account, and his purchasing power has increased by $33.
