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BEBS Exam Questions with 100% correct answers
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BEBS Exam Questions with 100% correct answersA consumer price index of 160 in 1996 with a base year of 1982-1984 would mean that the cost
of the market basket - ✔️✔️Rose 60% from the cost of the market basket in the base year
The substitution bias in the consumer price index refers to the idea that consumers _____ the
quantity of products they buy in response to price, and the CPI does not reflect this and
_________ the cost of the market basket - ✔️✔️Change; Overestimates
The base period for CPI calculations is generally 1982-84, 50% of households accessed the
internet through a broadband connection that would not have existed in the 1980s. This
potential for bias in the CPI is referred to as ______ bias and results in __________ - ✔️✔️Net
product; The CPI underestimating the true change in the cost of living
As currently calculated, the CPI tends to overestimate the true inflation rate because - ✔️✔️It
fails to correctly measure quality changes for some products
The CPI in 1990 was 131, and the CPI in 2010 was 218. If you earned a salary of $40,000 in 1990,
what would be a salary with equivalent purchasing power in 2010? - ✔️✔️$66,565
Lola wants to make a 6% real return on a loan that she is planning to make to a friend, and the
expected inflation rate during the period of the loan is 5%. She should charge her friend an
interest rate of - ✔️✔️11%
The cost to firms of changing prices - ✔️✔️Is called a menu cost
, A "shoe-leather cost" is the cost associated with - ✔️✔️Trying to reduce holdings of cash when
there is inflation
The deflation of the 1930s impacted the U.S. economy because it led some consumers to
_______ and because it ________ - ✔️✔️Borrow more money since money was now cheap;
Reduced the amount of money consumers would have to pay back on their outstanding loans
If you expect that the inflation rate is 5% and the actual inflation rate turned out to be exactly
8%, then - ✔️✔️Borrowers gain
If you expect that the inflation rate if 5% and the actual inflation rate turned out to be exactly
5%, then - ✔️✔️The inflation rate was fully anticipated and there is no unanticipated inflation
Which of the following individuals are hurt when the economy experiences unanticipated
inflation? - ✔️✔️Fixed income earners
Savers
Lenders
When the inflation rate exceeds 50% per month, the economy is experiencing -
✔️✔️Hyperinflation
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