Question

1. The on e is the m e that would prevail with 26 notion Rate d with potential output El amount of unemployment consistent with long run GDP. Difference between the long run and short nemployment rates 14. Which of the following represents a positive statement followed by nominative statement? Budget deficits slow economic growth, we should reduce the deficit We should prevent immigration, Immigrants steal jobs c. If you cheat on this exam, the ghost of Adam Smith will haunt you New York is the best city in the world, it attracts the most exceptional people All of the above 15. Which of the following reduce the effectiveness of GDP as a measure of well-being: a Well-being is subjective and difficult to measure GDP excludes anything that cannot be commodified such as integrity of politicians strength of families and communities, and the value of untouched natural resources Human happiness is a broader concept than acquisition of goods and services b. All of the above 16. For an open economy the components of GDP are: a. C+HG b. NX+GvC. C. C+I+G-NX d. C+I+G+NX 17. How will an increase in the price of imported Armani jeans influence measures of inflation? a. CPI and GDP deflator will not be effected b. CPI will not be effected GDP Deflator will rise c. Both the CPI and Deflator will rise d. Only the CPI will rise which of the following would cause the CPI to overstate inflation? a. Minimum wages Substitution bias c. Unemployment insurance d. All of the above nominal income of an employee at Marty's Meat Mayhem in 1994 was $8,000. The CPI

Answer 1

12. The correct answer is 'Option C'.

It is given that the CPI in 1964 = 94 and the CPI in 2012 = 240.

Since the value of CPI increased, it can be said that the purchasing power over the period declined.

To calculate how much it would cost now to purchase what it costed $1 in 1964, divide the CPI in 2012 by the CPI in 1964 and multiply it by $1. It equals:

$\fn_phv \frac{240}{94}=2.5532$

So, it cost $2.55 (approximately) now to purchase what it costed $1 in 1964.