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Consumer Price Index: Measuring the Cost of Living and Inflation

Instructions:

Choose an answer and hit 'next'. You will receive your score and answers at the end.

question 1 of 3

What is the real interest rate when the nominal interest rate on a bank checking account is 1%, and the rate of inflation is 2%?

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1. Which of the following statements is FALSE regarding inflation?

2. If the Consumer Price Index rises from 101 to 104, which of the following statements is true?

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About This Quiz & Worksheet

Test your ability to determine the use of the Consumer Price Index and to also identify properties it has with this quiz and worksheet. Practice problems assess your knowledge of why prices rise and why inflation takes place.

Quiz & Worksheet Goals

In these assessments you will be tested over your ability to:

  • Define inflation
  • Determine why prices rise
  • Explain the inflation rate
  • Learn how to use the CPI
  • Define purchasing power

Skills Practiced

This quiz and worksheet allow students to practice the following skills:

  • Problem solving - use acquired knowledge to solve inflation practice problems
  • Reading comprehension ensure that you draw the most important information from the related CPI lesson
  • Information recall - access the knowledge you have gained regarding purchasing power

Additional Learning

There is also an accompanying lesson that will help you learn more about the subject. The lesson is called Consumer Price Index: Measuring the Coast of Living and Inflation. It has the following objectives:

  • Understand traits of the CPI
  • Define purchasing power
  • Use the nominal interest rate
  • Determine characteristics of inflation
  • Explain real terms
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