Table 5.1 Year Price Index 2005 95 2006 99 2007 100 2008 104 2009 110

7. Table 5.1 shows a hypothetical price index for 5 years. If nominal wages increased by 4% between 2007 and 2008, we can determine that

(A) Real wages fell by 1% (B) Real wages rose by 1% (C) Real wages fell by 4% (D) Real wages rose by 4% (E) Real wages remained constant

9. If you hear in 2011 price index (CPI) is currently 210, you can determine that the same market basket costs (A) 10% more than it did in 2010 (B) 10% more than it did in the base year (C) 210% more than it did in the base year (D) 210% more than it did in the 2010 (E) 110% more than it did in the base year

10. What is the interpretation of a consumer price index (CPI) of 122 in year X? (A) A bundle of goods in year X costs $22 more than the base year. (B) A bundle of goods in year X costs $122 more than the previous year. (C) A bundle of goods in year X costs 122% more than the base year. (D) A bundle of goods in year X costs 22% more than the previous year. (E) A bundle of goods in year X costs 22% more than the base year.

Table 5.2: Annual Price of Goods in a Consumer's Basket (all prices in dollars)

Year Grubs Snars Jems Pols 2000 2.00 1.50 2.10 1.00 2001 3.00 2.50 2.10 1.75 2002 4.00 4.90 2.12 2.00

11. Refer to the data presented in Table 5.2. The bundle that is purchased by a typical consumer in a given year is 5 Grubs, 10 Snars, 3 Jems, and 2 Pols and 2000 is the reference year. What is the cost of a bundle of goods in 2001? (A) $9.35 (B) $7.64 (C) $49.80 (D) $79.36 (E) $16.50

12. Refer to the data presented in Table 5.2. The bundle that is purchased by a typical consumer in a given year is 5 Grubs, 10 Snars, 3 Jems, and 2 Pols and 2000 is the reference year. What is the consumer price index (CPI) in 2001? (A) 33.30 (B) 49.80 (C) 16.50 (D) 66.87 (E) 149.55

13. Refer to the data presented in Table 5.2. The bundle that is purchased by a typical consumer in a given year is 5 Grubs, 10 Snars, 3 Jems, and 2 Pols and 2000 is the reference year. What is the rate of inflation between 2001 and 2002? (A) 59.36% (B) 23.77%

(C) 49.80% (D) 138.32% (E) 88.77%

14. Refer to the data presented in Table 5.2. The bundle that is purchased by a typical consumer in a given year is 5 Grubs, 10 Snars, 3 Jems, and 2 Pols and 2000 is the reference year. What is the rate of inflation between 2000 and 2001? (A) 16.5% (B) 49.55% (C) 149.55% (D) -16.5% (E) -49.55%