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Chapter 22 Test Bank
Multiple Choice Questions
1. __________ implies that pressure for price increases reaches across
_______________markets, not just one.
A. inflation; all
B. deflation; most
C. inflation; most
D. deflation; all
Answer: C
Reference
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Understand
2. While one occasionally sees references to inflation over short time periods, the term typically
implies a(n)_____________ in prices.
A. ongoing decrease
B. ongoing rise
C. short term rise
D. short term decrease
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
3. The effects of inflation are seen in:
A. goods and services only
B. wages and income levels only
C. services and wages only
D. goods, services, wages and income levels
Answer: D
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
4. Inflation implies that the level of all prices _____________________.
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A. decrease
B. stay the same
C. increase
D. none of the above
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
5. When Anders took out his first two-year membership with Maxima Gym in 2004, the fee was
$540.00. He renewed his membership three times; in 2006 for $580.00, in 2008, for $600.00,
and again in 2010, for $630.00. What is the overall rate of inflation for Anders' gym
membership?
A. 8.6%
B. 5.4%
C. 7.87%
D. 16.66%
Answer: D
Reference:
Explanation:
Type: Multiple Choice Difficulty: Hard Category: Apply
6. Inflation can be calculated in terms of how the overall cost of ___________________
changes over time.
A. all goods
B. the basket of goods
C. all goods and services
D. all services
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
7. If the price index moves from 107 to 110, the rate of inflation is:
A. 3%
B. 30%
C. 28%
D. 2.8%
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Answer: D
Reference:
Explanation:
Type: Multiple Choice Difficulty: Hard Category: Apply
8. The most commonly cited measure of inflation in the United States is:
A. the Consumer Price Index (CPI).
B. the Deflationary Price Index (DPI)
C. the Cumulative Price Index (CPI)
D. the Inflationary Price Index (IPI)
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
9. One of the reasons that a rise in the price of a fixed basket of goods over time tends to
overstate the rise in a consumer’s true cost of living, is:
A. substitution bias
B. attribution bias
C. complimentary bias
D. preference bias
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
10. The percentage change in the price level from one time period to the next, whether the price
level is measured in terms of money or as a price index, will be the _____________.
A. inflation rate
B. price index rate
C. consumer price index
D. producer price Index
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
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Chapter 22 Test Bank
Multiple Choice Questions
1. __________ implies that pressure for price increases reaches across
_______________markets, not just one.
A. inflation; all
B. deflation; most
C. inflation; most
D. deflation; all
Answer: C
Reference
Explanation:
Type: Multiple Choice Difficulty: Medium Category: Understand
2. While one occasionally sees references to inflation over short time periods, the term typically
implies a(n)_____________ in prices.
A. ongoing decrease
B. ongoing rise
C. short term rise
D. short term decrease
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
3. The effects of inflation are seen in:
A. goods and services only
B. wages and income levels only
C. services and wages only
D. goods, services, wages and income levels
Answer: D
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
4. Inflation implies that the level of all prices _____________________.
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A. decrease
B. stay the same
C. increase
D. none of the above
Answer: C
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
5. When Anders took out his first two-year membership with Maxima Gym in 2004, the fee was
$540.00. He renewed his membership three times; in 2006 for $580.00, in 2008, for $600.00,
and again in 2010, for $630.00. What is the overall rate of inflation for Anders' gym
membership?
A. 8.6%
B. 5.4%
C. 7.87%
D. 16.66%
Answer: D
Reference:
Explanation:
Type: Multiple Choice Difficulty: Hard Category: Apply
6. Inflation can be calculated in terms of how the overall cost of ___________________
changes over time.
A. all goods
B. the basket of goods
C. all goods and services
D. all services
Answer: B
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Remember
7. If the price index moves from 107 to 110, the rate of inflation is:
A. 3%
B. 30%
C. 28%
D. 2.8%
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Answer: D
Reference:
Explanation:
Type: Multiple Choice Difficulty: Hard Category: Apply
8. The most commonly cited measure of inflation in the United States is:
A. the Consumer Price Index (CPI).
B. the Deflationary Price Index (DPI)
C. the Cumulative Price Index (CPI)
D. the Inflationary Price Index (IPI)
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
9. One of the reasons that a rise in the price of a fixed basket of goods over time tends to
overstate the rise in a consumer’s true cost of living, is:
A. substitution bias
B. attribution bias
C. complimentary bias
D. preference bias
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
10. The percentage change in the price level from one time period to the next, whether the price
level is measured in terms of money or as a price index, will be the _____________.
A. inflation rate
B. price index rate
C. consumer price index
D. producer price Index
Answer: A
Reference:
Explanation:
Type: Multiple Choice Difficulty: Easy Category: Understand
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