Q1. Steve Walker, CFA, is attending an economics lecture, during which the lecturer makes the following two statements about consumer price inflation: Statement 1: High-definition televisions are considerably more expensive than traditional models. This means consumers are spending more money per television unit, which represents a form of inflation. Statement 2: Employment contracts with cost-of-living increases based on the Consumer Price Index result in optimal economic decisions because they adjust wage costs automatically for the rate of inflation. Should Walker
agree or disagree with these statements? Statement 1 Statement 2
A) Agree Agree B) Disagree Disagree C) Disagree Agree
Q2. The consumer price index tends to: A) understate the inflation rate because its market basket is fixed and does not consider that consumers will substitute away from goods that have risen dramatically in price. B) overstate the inflation rate, because its market basket is fixed and does not consider that consumers will substitute away from goods that have risen dramatically in price. C) overstate the inflation rate because its market basket is variable and takes into consideration that consumers will substitute away from goods that have risen dramatically in price.
Q3. David Landau, CFA, was discussing the biases associated with the Consumer Price Index (CPI). He was also discussing the effect of these biases on determining the inflation rate of an economy. Which of the following is least likely a source of bias in CPI data and does the CPI generally understate or overstate the true rate of inflation? Not a source of bias CPI bias direction A) Consumer preferences Overstate B) Quality changes Understate C) Outlet substitution Overstate
Q4. The current annual inflation rate, as measured by using the Consumer Price Index (CPI), is best defined as: A) percentage change in the CPI from its base period. B) percentage change in the CPI from a year ago. C) increase in the CPI from a year ago.
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发表于 2009-1-15 14:11
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