lOMoAR cPSD| 37668344
lOMoARcPSD|37668344
TESTBANK-CHAPTER 24 PRINCIPLES
OF ECONOMICS
Measuring the Cost of Living
Multiple Choice – Section 00: Introduction
1. Babe Ruth, the famous baseball player, earned $80,000 in 1931. Today, the best
baseball players can earn more than 400 times as much as Babe Ruth earned in 1931.
However, prices have also risen since 1931. We can conclude that
a. the best baseball players today are about 400 times better off than Babe Ruth was in
1931.
b. because prices have also risen, the standard of living of baseball stars hasn't
changed since1931.
c. one cannot make judgments about changes in the standard of living based on changes
in prices and changes in incomes.
d. one cannot determine whether baseball stars today enjoy a higher standard of living
than BabeRuth did in 1931 without additional information regarding increases in
prices since 1931.
ANSWER: d
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.117 - LO: 24-0
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: DISC:Price Level Concepts Inflation
KEYWORDS: BLOOM'S: Comprehension
2. The consumer price index is used to
a. monitor changes in the level of wholesale prices in the economy.
b. monitor changes in the cost of living over time.
c. monitor changes in the level of real GDP over time.
d. monitor changes in the stock market.
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: ECON.MANK.15.117 - LO: 24-0
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: DISC:Price Level Concepts Consumer Price Index
KEYWORDS: BLOOM'S: Knowledge
, lOMoAR cPSD| 37668344
3. The consumer price index is used to
a. convert nominal GDP into real GDP.
b. turn dollar figures into meaningful measures of purchasing power.
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
, lOMoAR cPSD| 37668344
2 Measuring the Cost of Living
c. characterize the types of goods and services that consumers purchase.
d. measure the quantity of goods and services that the economy produces.
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: ECON.MANK.15.117 - LO: 24-0
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: DISC:Price Level Concepts Consumer Price Index
KEYWORDS: BLOOM'S: Knowledge
4. Which of the following is not correct?
a. The consumer price index gives economists a way of turning dollar figures into
meaningful measures of purchasing power.
b. The consumer price index is used to monitor changes in the cost of living over time.
c. The consumer price index is used by economists to measure the inflation rate.
d. The consumer price index is used to measure the quantity of goods and services
that theeconomy is producing.
ANSWER: d
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.117 - LO: 24-0
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: DISC:Price Level Concepts Consumer Price Index
KEYWORDS: BLOOM'S: Comprehension
5. When the consumer price index rises, the typical family
a. has to spend more dollars to maintain the same standard of living.
b. can spend fewer dollars to maintain the same standard of living.
c. finds that its standard of living is not affected.
d. can offset the effects of rising prices by saving more.
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: ECON.MANK.15.117 - LO: 24-0
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: DISC:Price Level Concepts Consumer Price Index
KEYWORDS: BLOOM'S: Knowledge
, lOMoAR cPSD| 37668344
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
lOMoARcPSD|37668344
TESTBANK-CHAPTER 24 PRINCIPLES
OF ECONOMICS
Measuring the Cost of Living
Multiple Choice – Section 00: Introduction
1. Babe Ruth, the famous baseball player, earned $80,000 in 1931. Today, the best
baseball players can earn more than 400 times as much as Babe Ruth earned in 1931.
However, prices have also risen since 1931. We can conclude that
a. the best baseball players today are about 400 times better off than Babe Ruth was in
1931.
b. because prices have also risen, the standard of living of baseball stars hasn't
changed since1931.
c. one cannot make judgments about changes in the standard of living based on changes
in prices and changes in incomes.
d. one cannot determine whether baseball stars today enjoy a higher standard of living
than BabeRuth did in 1931 without additional information regarding increases in
prices since 1931.
ANSWER: d
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.117 - LO: 24-0
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: DISC:Price Level Concepts Inflation
KEYWORDS: BLOOM'S: Comprehension
2. The consumer price index is used to
a. monitor changes in the level of wholesale prices in the economy.
b. monitor changes in the cost of living over time.
c. monitor changes in the level of real GDP over time.
d. monitor changes in the stock market.
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: ECON.MANK.15.117 - LO: 24-0
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: DISC:Price Level Concepts Consumer Price Index
KEYWORDS: BLOOM'S: Knowledge
, lOMoAR cPSD| 37668344
3. The consumer price index is used to
a. convert nominal GDP into real GDP.
b. turn dollar figures into meaningful measures of purchasing power.
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
, lOMoAR cPSD| 37668344
2 Measuring the Cost of Living
c. characterize the types of goods and services that consumers purchase.
d. measure the quantity of goods and services that the economy produces.
ANSWER: b
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: ECON.MANK.15.117 - LO: 24-0
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: DISC:Price Level Concepts Consumer Price Index
KEYWORDS: BLOOM'S: Knowledge
4. Which of the following is not correct?
a. The consumer price index gives economists a way of turning dollar figures into
meaningful measures of purchasing power.
b. The consumer price index is used to monitor changes in the cost of living over time.
c. The consumer price index is used by economists to measure the inflation rate.
d. The consumer price index is used to measure the quantity of goods and services
that theeconomy is producing.
ANSWER: d
POINTS: 1
DIFFICULTY: Moderate
LEARNING OBJECTIVES: ECON.MANK.15.117 - LO: 24-0
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: DISC:Price Level Concepts Consumer Price Index
KEYWORDS: BLOOM'S: Comprehension
5. When the consumer price index rises, the typical family
a. has to spend more dollars to maintain the same standard of living.
b. can spend fewer dollars to maintain the same standard of living.
c. finds that its standard of living is not affected.
d. can offset the effects of rising prices by saving more.
ANSWER: a
POINTS: 1
DIFFICULTY: Easy
LEARNING OBJECTIVES: ECON.MANK.15.117 - LO: 24-0
NATIONAL STANDARDS: United States - BUSPROG: Analytic
TOPICS: DISC:Price Level Concepts Consumer Price Index
KEYWORDS: BLOOM'S: Knowledge
, lOMoAR cPSD| 37668344
© 2015 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or
posted to a publicly accessible website, in whole or in part.
