Question Details

If the price index is 120 in 1989 and 150 in 1990, what is the rate of inflation 



1. From the data below, the official measure of GDP is 
a) below 100 b) between 100 and 103 c) between 104 and 107 d) above 107 
Personal Consumption Expenditures 62.0 
Depreciation 5.0 
Indirect Business Taxes less Subsidies 1.0 
Gross Private Domestic Investment 15.0 
Exports 12.0 
Government Purchases of Goods and Services 20.0 
Government Transfer Payments 4.0 
Imports 11.0 
2. Suppose the sum of consumption, investment, and government spending is $620 billion, where investment includes involuntary inventory accumulation of $2 billion in addition to expenditure on plant and equipment, and government spending includes $5 billion interest payments on the national debt, $5 billion unemployment insurance payments, $10 billion social security payments, $2 billion in salaries to elected politicians, $14 billion in salaries to government employees and $25 billion expenditure on goods and services produced by the private sector. If we imported $3 billion more than we exported, measured GDP by the adding expenditures method is 
a) $600b or less b) more than $600b but not more than $610b 
c) more than $610b but not more than $620b d) more than $620b 
3. If in 1992 nominal GDP is 600 and real GDP is 500, then the price index for 1992 
a) is 100 b) is 120 
c) cannot be calculated because we don't know the base year 
d) cannot be calculated because we don't know last year's figures 
4. If a typical market basket of goods and services cost $120 in 1975, the base year, and $180 in 1985, the price index in 1985 would be 
a) 120 b) 150 c) 160 d) 180 
5. If the price index is 120 in 1989 and 150 in 1990, what is the rate of inflation? 
a) 20% b) 25% c) 30% d) more than 30%




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