Consumer Price Index

What is inflation?

Merryland is a closed economy that produces and consumes only marshmallows and chocolates. In 2019, marshmallows cost $1 each, chocolates cost $2 each, and Merrylanders buy 10 marshmallows. In 2020, marshmallows cost $2, chocolates cost $1, and Merrylanders buy 10 chocolates. Consider 2019 as the base year wherein the consumer basket is fixed. If the government of Merryland determines that the typical consumer basket is composed of 3 marshmallows and 2 chocolates, how did the CPI change from 2019 to 2020?

1. 1. It increased by 15.1%

   2. It decreased by 13. 5%

   3. It increased by 14.3%

   4. It decreased by 11.4%

Merryland is a closed economy that produces and consumes only marshmallows and chocolates. In 2019, marshmallows cost $1 each, chocolates cost $2 each, and Merrylanders buy 10 marshmallows. In 2020, marshmallows cost $2, chocolates cost $1, and Merrylanders buy 10 chocolates. Consider 2019 as the base year wherein the consumer basket is fixed. If the government of Merryland determines that the typical consumer basket is composed of 3 marshmallows and 2 chocolates, what is the consumer price index in Merryland for 2020? 

1. 1. 7.143

   2. 5.341

   3. 3.145

   4. 1.143

Consider an economy that produces and consumes coffee and tea. In the following table are data for two different years. Using the year 2019 as base year, what is the nominal GDP for the year 2020?

1. $3,007,200,000

2. $5,004,500,000

3. $8,007,200,000

4. $9,007,200,000

1. Consider an economy that produces and consumes coffee and tea. In the following table are data for two different years. Using the year 2019 as base year, what is the nominal GDP for the year 2019?

1. $3,500,000,000

2. $4,500,000,000

3. $5,500,000,000

4. $6,500,000,000

Consider an economy that produces and consumes coffee and tea. In the following table are data for two different years. Using the year 2019 as base year, what is the real GDP for the year 2020?

1. $3,007,200,000

2. $5,004,500,000

3. $8,007,200,000

4. $9,007,200,000

Robby consumes only carrots and potatoes. In 2019, carrots cost $1 each, potatoes cost $2 each, and Robby buys 50 carrots and 100 potatoes. In 2020, carrots cost $2, potatoes cost $1, and Robby buys 150 carrots and 50 potatoes. Consider 2019 as the base year wherein the consumer basket is fixed. What was Robby’s nominal spending on vegetables each year?

1. 1. $150 in 2019 and $350 in 2020

   2. $250 in 2019 and $350 in 2020

   3. $350 in 2019 and $250 in 2020

   4. $250 in 2019 and $150 in 2020

Consider an economy that produces and consumes coffee and tea. In the following table are data for two different years. Using the year 2019 as base year, what is the GDP Deflator for 2020?

1. 1

2. 1.2

3. 1.4

4. 1.6

Robby consumes only carrots and potatoes. In 2019, carrots cost $1 each, potatoes cost $2 each, and Robby buys 50 carrots and 100 potatoes. In 2020, carrots cost $2, potatoes cost $1, and Robby buys 150 carrots and 50 potatoes. Consider 2019 as the base year wherein the consumer basket is fixed. If the typical consumer basket is composed of 75 carrots and 50 potatoes, what is the consumer price index for 2020? 

1. 1. 7.143

   2. 5. 341

   3. 3. 145

   4. 1. 143

Consider an economy that produces and consumes coffee and tea. In the following table are data for two different years. Using the year 2019 as base year, what is the GDP Deflator for 2019?

1. 1

2. 1.2

3. 1.4

4. 1.6

Robby consumes only carrots and potatoes. In 2019, carrots cost $1 each, potatoes cost $2 each, and Robby buys 50 carrots and 100 potatoes. In 2020, carrots cost $2, potatoes cost $1, and Robby buys 100 carrots and 50 potatoes. Consider 2019 as the base year wherein the consumer basket is fixed. What is Robby’s real spending on vegetables for 2020?

1. 1. $150

   2. $250

   3. $350

   4. $450

Merryland is a closed economy that produces and consumes only marshmallows and chocolates. In 2019, marshmallows cost $1 each, chocolates cost $2 each, and Merrylanders buy 10 marshmallows. In 2020, marshmallows cost $2, chocolates cost $1, and Merrylanders buy 10 chocolates. Consider 2019 as the base year wherein the consumer basket is fixed. If the government of Merryland determines that the typical consumer basket is composed of 3 marshmallows and 2 chocolates, what is the consumer price index in Merryland for 2019? 

1. 1. 1

   2. 3

   3. 5

   4. 7

What are some of the differences between CPI and the GDP Deflator?

What is the CPI?

What is the GDP Deflator?