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In: Business and Management

Submitted By longstar
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Practice Multiple Choice Tests for Chapter 4
Answers and feedbacks are at the end of this file.

1. You got a job in year 2008 with a salary of $25,000. In 2009, you receive a $2000 increase in your salary. CPI for 2009 (with base year at year 2008) is 108. The percentage increase in your real income is: a. 2% b. 3% c. Zero d. 1%

2. The annual inflation rate in an economy dropped from 10% two years ago to 2% last year. Which of the following apply? a. prices of consumer goods dropped by 2% last year, ii) prices of consumer goods uniformly rose at 2% last year, iii) prices of some consumer goods rose by more than 2% and prices for some may have even fallen b. prices of consumer goods uniformly rose at 2% last year c. prices of some consumer goods rose by more than 2% and prices for some may have even fallen

3. [INCOME.1] The CPI in 2008 is 120, while the same measure in 2009 stands at 148. You, a part-time paralegal, earned $ 8,500 a year in 2008, and $ 12,300 a year in 2009. Your real income in 2008, and in 2009 is:
a. $7000 and $8300
b. $7803.33 and $8310.81
c. $7083.33 and $8310.81
d. $ 7038 and 8030.31

4. [INCOME.2] Consider question 3 above. The percentage change in your real income between 2008 and 2009 is:
a. 17.33%
b. 16.55%
c. 18.57%

5. [CPI.1] The rate of inflation in the CPI in year 2008 for an economy is 4.17%. The CPI for years 2008 and 2009 for this economy are, respectively, 125 and 133. The inflation rate in the CPI for year 2009 is __.
a. 6.4%
b. 4.6%
c. 5.6%
d. 4.5%

6. [CPI.2] Consider question 5 above. The nominal interest rates between 2008 and 2009
a. have risen
b. have fallen
c. have stayed the same

7. A high and unexpected inflation a. renders the lenders and borrowers both losers b. renders the borrower a winner and the lender a loser c. leaves workers worse off...

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