Chapter 17: Index Numbers

Which of the following are examples of price indexes?
1. Consumer Price Index
2. Dow Jones Industrial Average
3. Producer Price Index
4. All of the above
5. None of the above
The price relative for item A for 2004 is
1. 0.81
2. 1.24
3. 81
4. 124
5. None of the above
The price relative for item C is
1. 97
2. 100
3. 103
4. 124
The unweighted aggregate price index
1. 103
2. 115
3. 116
4. 124
Use the Laspeyres method to compute a weighted aggregate index.
1. 108.9
2. 114.1
3. 114.3
4. 119.7
Use the Paasche method to compute a weighted aggregate index.
1. 10.8.9
2. 114.1
3. 114.7
4. 119.7
The price of a brand of organic enchilada was $2.97 in 1996 and was $3.13 in 2001. The price relative for 2001 using a 1996 base is
1. 0.95
2. 0.95
3. 5.4
4. 95
5. 105
The price of a brand of organic enchilada was $2.97 in 1996 and was $3.13 in 2001. The interpretation of the price relative for 2001 using a 1996 base is that the price has increased 105%.
1. True
2. False
The weighted aggregate index which uses the current period quantity weights is called the Laspeyres Index.
1. True
2. False
The base period value for a price index is usually given a value of
1. 1
2. 10
3. 100
4. 1000
5. None of the above
Below you are given the CPI (1982-1984 base) for 1999 through 2003

Given this information, one can claim that, in general, prices have gone up $17.40 over the 5 years.
1. True
2. False
Below you are given the CPI (1982-1984 base) for 1999 through 2003 and John's hourly wage from 1999 to 2003.

Deflate John's 1999 wage using the CPI with the 1982-1984 base.
1. $3.56
2. $5.40
3. $6.00
4. $382
Below you are given the CPI (1982-1984 base) for 1999 through 2003 and John's hourly wage from 1999 to 2003.

Deflate John's 2003 wage using the CPI with the 1982-1984 base.
1. $3.92
2. $5.30
3. $6.00
4. $6.50
Below you are given the CPI (1982-1984 base) for 1999 through 2003 and John's hourly wage from 1999 to 2003.

Over the five-year period John's deflated wage using the CPI with the 1982-1984 base has
1. decreased 1.9%
2. increased 2.6%
3. increased 9.8%
4. increased 12.5%
Below you are given the CPI (1982-1984 base) for 1999 through 2003 and John's hourly wage from 1999 to 2003.

Give John's 2003 wage in 1999 dollars.
1. $3.92
2. $6.15
3. $8.83
4. $11.62