Question 1 (10 points)

Given a price index in year 1 of 200 and in year 2 of 250, what is the inflation rate over the year?

0250%

02.5%

050%

25%

Question 2 (10 points)

Given a price index of 100 in year 1 and 125 in year 2, if you earned 100,000 in year

How much would you have to earn in year 2 to be better off in real terms?

$105,000

$126,000

$100,000

$120,000

Question 3 (10 points)

If prices increased and nominal GDP decreased then:

Question 4 (10 points)

Which of the following does not count towards gross domestic product

purchase of a new car

purchase of a laptop computer

payments for daycare p

purchase of a used car

Question 5 (10 points)

Saved

If the price index is 275 in 2020 and 300 in 2024 how much would you have to earn in 2024 to be equivalent to earning $75,000 in 2020?

$81,818

0$77,952

$83,500

$76,000

Question 6 (10 points)

Gross domestic product captures economic welfare

True

False

Question 7 (10 points)

The CPI (Consumer Price Index) applies equally to all consumers in the United States

True

False

Question 8 (10 points)

Which of the following is NOT included in GDP?

Spending on health care

Spending on pollution abatement

Spending on National defense

O Spending on illegal drugs

Question 9 (10 points)

An increase in GDP means that our economic welfare has increased.

True

False

Question 10 (10 points)

The CPI accurately captures the inflation rate in all subsets of goods and services.

True

False