1.) What does the Consumer Price Index measure?

A. the average price paid by urban consumers for an airline ticket

B. the average price paid by urban consumers for a sports car

C. the change in value of the gross national product

D. the average price paid by urban consumers for a "market basket" of consumer goods and services

E. the change in value of the American dollar

2.) Suppose the CPI increases this year from208to218. What is the rate of inflation for this year? Round your answer to the nearest tenth of a percent.

Rate of inflation = %

3.) Suppose the buying power of a dollar decreases by3% this year. What is the rate of inflation this year? Round your answer to the nearest tenth of a percent.

The percent rate of inflation = %

4.) In this exercise, we see the cumulative effects of inflation. Refer to theCPI table.

Find thethree-year inflation rate from December1977to December1980. (Round your answer to one decimal place.)

%

5.) In this exercise we see the cumulative effects of inflation. Refer to theCPI table.

Consider the one-year inflation rate for each of the three years from December1980toDecember1983.Find the sum of these three numbers. (Round your answer to one decimal place.)

%

6.)In this exercise we see the cumulative effects of inflation. Refer to theCPI table.

Consider the one-year inflation rate for each of the three years from December1980toDecember1983.Find the sum of these three numbers. (Round your answer to one decimal place.)

%

Is the sum the same as finding the three-year inflation rate from December1980toDecember1983? Is the sum the same as finding the three-year inflation rate from

December1980toDecember1983?

A.) Yes, the sums are the same.

B.) No, the sums are not the same.

7.) The table below shows that the inflation rate forIranin the year 2013 was42%.

Examples of Hyperintation in 2013

Country: Estimated inflation rate:

Syria 59%

Venezuela 56%

Iran 42%

Argentina 21%

By how much did the buying power of theIranian rial(the currency inIran) decrease during 2013? (Round your answer to two decimal places.)

%

8.) If prices increase2% each year for 10 years, then a jacket that costs $40today will cost $48.76in 10 years. What is the percentage decrease in the buying power of currency over the10-yearperiod? (Round your answer to one decimal place.)

%