Podcast
Questions and Answers
What is the purpose of indexing in the context of inflation rates?
What is the purpose of indexing in the context of inflation rates?
- To make inflation rates easier to compute and compare across years (correct)
- To calculate the Consumer Price Index
- To determine the base year for inflation calculations
- To make inflation rates harder to compute
What is the formula to calculate the percentage change in the price level?
What is the formula to calculate the percentage change in the price level?
- (New year level - Prior year level) x 100 / Prior year level (correct)
- (New year level / Prior year level) x 100
- (New year level - Prior year level) / 100
- (New year level - Prior year level) / Prior year level
What is a limitation of the Consumer Price Index?
What is a limitation of the Consumer Price Index?
- It tends to overstate the true rise in the cost of living due to substitution bias and quality/new goods bias (correct)
- It is only calculated annually
- It tends to understate the true rise in the cost of living
- It only measures inflation for a specific subset of consumers
What is the purpose of the base year in inflation calculations?
What is the purpose of the base year in inflation calculations?
What is substitution bias in the context of inflation rates?
What is substitution bias in the context of inflation rates?
What is the process by which the BLS constructs the Consumer Price Index?
What is the process by which the BLS constructs the Consumer Price Index?
What percentage of the Consumer Price Index is attributed to housing?
What percentage of the Consumer Price Index is attributed to housing?
What is the formula to calculate the CPI in any month?
What is the formula to calculate the CPI in any month?
What is the purpose of updating the basket of goods behind the CPI more frequently?
What is the purpose of updating the basket of goods behind the CPI more frequently?
What is the bias that arises when a consumer switches to a cheaper alternative in response to a price increase?
What is the bias that arises when a consumer switches to a cheaper alternative in response to a price increase?
What is the difference between the inflation rate calculated using the CPI and the true rise in inflation?
What is the difference between the inflation rate calculated using the CPI and the true rise in inflation?
What is the index that measures inflation based on prices paid for supplies and inputs by producers of goods and services?
What is the index that measures inflation based on prices paid for supplies and inputs by producers of goods and services?
In low-income countries, what is a common way for workers to participate in the labor market?
In low-income countries, what is a common way for workers to participate in the labor market?
What type of unemployment is closely tied to the business cycle?
What type of unemployment is closely tied to the business cycle?
What happens to the labor market when wages are sticky?
What happens to the labor market when wages are sticky?
What is an implicit contract in the labor market?
What is an implicit contract in the labor market?
What does the efficiency wage theory suggest?
What does the efficiency wage theory suggest?
What is the result of sticky wages in the labor market?
What is the result of sticky wages in the labor market?