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| 1. An index number is a percent that measures the change in price, quantity, value, or some other item of interest from one time to another. |
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| 2. All indexes have the same base, namely 1982-84, written 1982-84=100. |
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Definition
| False: Consumer Price Index |
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| 3. An index is a convenient way of comparing changes for different variables, i.e., average income and food prices. |
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| 4. The Consumer Price Index measures the change in prices of a fixed market basket of goods and services from one period to another. |
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| 5. One function of the CPI is to allow consumers to determine the degree to which their purchasing power is being eroded by price increases. |
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| 6. The CPI is used as a yardstick for revising wages, pensions and other income payments to keep pace with changes in prices or inflation. |
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| 7. The CPI is not just one index, but includes a large number of groups, subgroups and selected items, such as a food index, a medical care index and an entertainment index. |
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| 8. The first of two Consumer Price Indexes is for all urban consumers and covers about 80 percent of the total non-institutional population, while the second one is for urban wage earners and clerical workers and covers about half the population. |
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| 9. The concept of real income is sometimes called deflated income or income expressed in constant dollars and the CPI is called the deflator. |
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| 10. Social security, pensions, many apartment leases and many labor contracts are tied to the change in the CPI |
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| 11. Millions of employees in automobile, steel, and other industries have their wages adjusted upward when the CPI increases. The specifics are in the management-union contracts. These clauses in the contracts are referred to as "escalator clauses." |
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| 12. When two or more series of index numbers to be compared do not have the same base period, we select a common base period for all series. Then we use the respective base numbers as the denominators and convert each base to the new base |
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Term
| What is the purpose of an index? |
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Definition
| The purpose of an index is express changes over time as a percent. |
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| What do most indexes have in common? |
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Definition
| a base period and a current period |
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| In a value index, what variable is usually the weight? |
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| What is the base year for the Consumer Price Index currently? |
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| What is the index that measures the average change in prices received in the primary markets of the United States by producers of commodities? |
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| What is a price index for a single commodity called? |
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| What is the symbol used to designate a base period price? |
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| What is a major disadvantage of the unweighted price index? |
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Definition
| extremely large or small values overly influence the index |
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| What is another name for the unweighted method of computing an index? |
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| Which index is computed using base year prices and quantities and current year prices and quantities together? |
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| Which index measures the change in the prices of a fixed market basket of goods and services from one time period to another? |
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Definition
| Consumer Price Index (CPI) |
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| What is another term for real income? |
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| If we divide one dollar by the CPI and multiply it this result by 100, what is the result called? |
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| Purchasing power of the dollar |
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