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Inflation & Income Policies Chapter Exam

Exam Instructions:

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

Page 1

Question 1 1. Using the chart below, which statement is true regarding wages over the three year period?

Question 2 2. Melissa has a choice between two jobs. The first is a job is in New York City with a salary of $90,000. The other job has a salary of $80,000 per year salary in Boise, Idaho. Let's assume that the CPI is 120 in New York, while the CPI is 100 in Boise. If Melissa wants to maximize her 'real wage', which job should she choose?

Question 3 3. Last year, an assembly-line worker earned $10 per hour when the Consumer Price Index (CPI) was 100. This year, the same worker earned $12 per hour, but the CPI has increased to 125. What happened to the worker's real wage?

Question 4 4. Last year, the Consumer Price Index (CPI) was 120, and Bob's household earned $80,000. Assuming this year's CPI is 130, what would Bob's household need to earn in order to have the same purchasing power as last year?

Question 5 5. In year one, a worker's nominal wage is $25,000, and the CPI is 100. The following year, the worker's nominal wages stay the same, but the CPI is 105. In order to calculate the worker's real wage in year two, what needs to be done?

Page 2

Question 6 6. What is an expenditure?

Question 7 7. What is the role of firms in the circular flow of income?

Question 8 8. Who earns money and spends their income on goods and services?

Question 9 9. What is money called that is added to the circular flow of income?

Question 10 10. When money is saved, what it is considered?

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Question 11 11. What is the formula used to calculation the rate of inflation?

Question 12 12. The average price of a microwave oven in 2011 was $225 and was $230 in 2012. What was is the rate of inflation?

Question 13 13. Which of the following is the best explanation of inflation?

Question 14 14. What's the index used by the US government to calculate the general inflation rate?

Question 15 15. What's the term that describes the opposite of inflation?

Inflation & Income Policies Chapter Exam Instructions

Choose your answers to the questions and click 'Next' to see the next set of questions. You can skip questions if you would like and come back to them later with the yellow "Go To First Skipped Question" button. When you have completed the practice exam, a green submit button will appear. Click it to see your results. Good luck!

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