CPI

A detailed infographic showing the concept of Consumer Price Index (CPI) and inflation, featuring colorful charts, arrows illustrating price changes over time, and symbols representing various economic goods and services.

Understanding CPI and Inflation Quiz

Test your knowledge of the Consumer Price Index (CPI) and inflation with this engaging quiz! Dive into the key concepts that influence our economy, from price measurement to interest rates.

10 multiple-choice questions
Assess your understanding of CPI
Get insights into inflation and interest rates

10 Questions2 MinutesCreated by CalculatingEconomist25

If you want to calculate the rate of price for inflation for all goods produced in a nation you would use CPI

True

False

What basket of goods and services used to measure CPI

Random of goods and services produced in economy

Food, clothing, transportation, entertainment, education

Goods and services bought by typical consumers surveyed by government

Suppose that the price of a product has risen relatively than general in these several years. Which causes the problem of CPI

Substitution bias

The introduction of new goods

Unmeasured quality

Inflation

Suppose that the CPI in 2000 is 165, and 215 in 2005. Calculate the inflation rate

50%

30%

No correct answer

Which of the following statements about real and nominal interest rates is correct?

Real interest rates can be either positive or negative, but nominal interest rates must be positive

Real interest rates and nominal interest rates must be positive.

Real interest rates must be positive, but nominal interest rates can be either positive or negative

Real interest rates and nominal interest rates can be either positive or negative

Because the CPI is based on a fixed basket of goods, the introduction of new goods and services in the economy causes the CPI to overestimate the cost of living. This is so because

New goods and services are always of higher quality than existing goods and services.

New goods and services cost less than existing goods and services.

New goods and services cost more than existing goods and services

When a new good is introduced, it gives consumers greater choice, thus reducing the amount they must spend to maintain their standard of living

In 1990, John's salary was $200 with the CPI of 120, but in 2020 John's salary is $500 with the CPI of 270. He is better off in 2020

True

False

Understanding CPI and Inflation Quiz

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