Econ Chapter 10 Homework questions and answers 100% correct

A loaf of bread cost $0.18 in 1955 and the CPI was 26.8. The CPI in 2013 was 233. The cost of a loaf of bread in 1955 using 2013 dollars would be? $0.02 $1.56 $1.80 $156.00 $1.56 If healthcare costs make up 8% of total consumer expenditures and they rise by 15% while the other components in the consumer price index remain constant, by how much will the price index rise? 1.2% 9.2% 15.0% 23.0% 1.2% If your boss calls you into her office and offers you a promotion, which will include a 5% pay increase, how would you evaluate the value of your raise? Very good, since the rate of inflation is 6%. Very good, since the rate of inflation is 1%. Bad, since the rate of inflation is 1%. Bad, since the rate of inflation is 4%. Very good, since the rate of inflation is 1%. In 1991, the Barenaked Ladies released their hit song "If I Had a Million Dollars." How much money would the group need to have a million dollars' worth of purchasing power in 2012 rounded to the nearest cent? Note that the consumer price index in 1991 was 136.2 and in 2012 it was 230.0. $1,000,000.00 $1,688,693.10 $592,173.91 $1,688,693.10 Let's say you plan to retire 40 years from now, and you decide you could live on $40,000 per year if you retired today. If the average annual inflation rate is 3% between now and your retirement date, how much money per year would you need to have saved? $41,200 $120,000 $130,400 $130,400 Suppose the prices of homes go up by 10 % and the prices of concert tickets rise by 20%, which will have the larger impact on the CPI? the change in house prices the change in concert ticket prices they will both have the same impact there is not enough information to make a decision. the change in house prices Suppose you sign a two- year job contract with Wells Fargo stipulating that you will receive an annual salary of $93,500 plus an additional 2% over that in the second year to account for expected inflation. Based on this scenario, which of the following statements is true? If the inflation rate turns out to be 3% rather than 2%, Wells Fargo will be worse off. If the inflation rate turns out to be 3% rather than 2%, you will be worse off. If the inflation rate turns out to be 1% rather than 2%, you will be worse off. If the inflation rate turns out to be 3% rather than 2%, you will be worse off. The Bureau of Labor Statistics reported the consumer price index as 211.4 in December 2007, and 231.1 in December 2012. By what percentage did the index increase from the end of 2007 to the end of 2012 (rounded to one decimal place)? 0.09% 9.0% 9.3% 19.7% 9.3% The equation of exchange is helpful for determining the effect of money supply changes on the price level. Using this concept, which of the following statements is true? Real GDP grows at 3% and inflation is equal to 2%, and with no change in velocity, there is no change in the money supply. Real GDP falls by 3% and there is no inflation, but the money supply grew by 5%.Therefore the change in velocity would be negative 8 percent Real GDP increases by 3%, velocity does not change, and the money supply grows by 10%. The implied rate of inflation would be 13% Real GDP falls by 3% and there is no inflation, but the money supply grew by 5%.Therefore the change in velocity would be negative 8 percent The table shown here gives a cost-of-living index for 14 different cities. If you are living and working in Phoenix and earning $100,700 per year, to have the same standard of living in Manhattan you would need $116 $100,700 $116,000 $216,700 $216,700 Which of the following statements are NOT true about inflation? It occurs when the overall level of prices increases. Some prices may fall even when most others rise. Some prices affect consumers more than others. When in the 2-4% range, it can be a sign of a healthy economy. When in the 2-4% range, it can be the sign of a weak economy. When in the 2-4% range, it can be the sign of a weak economy.