1.

The primary purpose of measuring the overall level of prices in the economy is to
a. allow for the measurement of GDP.
b. allow consumers to know what kinds of prices to expect in the future.
c. allow for the comparison of dollar figures from different points in time.
d. allow for the comparison of dollar figures from the same point in time.

2. Babe Ruth's 1931 salary was $80,000. Government statistics show a consumer price index of 15.2 for 1931 and 237 for
2015. Ruth's 1931 salary was equivalent to a 2015 salary of about
a. $5,296.
b. $1,128,421
c. $1,247,368
d. $17,152,000

3. When we express Babe Ruth’s 1931 salary in today’s dollars and compare his salary to those of current New York
Yankee players, we find that the current median salary of today’s Yankees is
a. about three quarters of Ruth’s salary.
b. about the same as Ruth’s salary.
c. about twice Ruth’s salary.
d. more than four times Ruth’s salary.

4. In 1931, President Herbert Hoover was paid a salary of $75,000. Government statistics show a consumer price index of
15.2 for 1931 and 237 for 2015. President Hoover’s 1931 salary was equivalent to a 2015 salary of about
a. $4,965.
b. $1,169,408.
c. $1,057,894.
d. $16,080,001.

5. In 1931 the price of a movie ticket was $0.25. The consumer price index was 15.2 in 1931, and 210 in 2008. Using
2008 prices, the real price of a movie in 1931 was
a. $13.82.
b. $52.50.
c. $1.81.
d. $3.45.

6. You know that a candy bar cost five cents in 1962. You also know the CPI for 1962 and the CPI for today. Which of
the following would you use to compute the price of the candy bar in today's prices?
a. five cents (1962 CPI / today's CPI)
b. five cents ((today's CPI - 1962 CPI)/1962 CPI)
c. five cents (today's CPI / 1962 CPI)
d. five cents today's CPI - five cents 1962 CPI.

7. You know that a candy bar costs sixty cents today. You also know the CPI for 1962 and the CPI for today. Which of
the following would you use to compute the price of the candy bar in 1962 prices?
a. sixty cents (today's CPI - 1962 CPI)
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 b. sixty cents (1962 CPI - today's CPI)
c. sixty cents (today's CPI / 1962 CPI)
d. sixty cents (1962 CPI / today's CPI)

8. If the CPI was 95 in 1955 and is 475 today, then $100 today purchases the same amount of goods and services as
a. $4.75 purchased in 1955.
b. $20.00 purchased in 1955.
c. $95.00 purchased in 1955.
d. $500 purchased in 1955.

9. If the CPI was 90 in 1975 and is 225 today, then $100 today purchases the same amount of goods and services as
a. $25.00 purchased in 1975.
b. $33.33 purchased in 1975.
c. $40.00 purchased in 1975.
d. $135.55 purchased in 1975.

10. If the CPI was 104 in 1967 and is 390 today, then $10 in 1967 purchased the same amount of goods and services as
a. $2.67 purchases today.
b. $37.50 purchases today.
c. $39.00 purchases today.
d. $104.00 purchases today.

11. If the CPI was 108.00 in 1942 and is 336.96 today, then $10 in 1942 purchased the same amount of goods and services
as
a. $2.57 purchases today.
b. $28.89 purchases today.
c. $31.20 purchases today.
d. $38.89 purchases today.

12. The CPI was 96 in 1982, and the CPI was 230 in 2012. How much money would you have needed in 2012 in order to
buy what you could have bought with $500 in 1982?
a. $208.96
b. $1,197.92
c. $697.92
d. $1,697.92

13. The CPI was 172 in 2007, and the CPI was 46.5 in 1982. If your parents put aside $1,000 for you in 1982, then how
much would you have needed in 2007 in order to buy what you could have bought with the $1,000 in 1982?
a. $270.35
b. $1,255.00
c. $2,698.92
d. $3,698.92

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14. In 1969, Malcolm bought a Pontiac Firebird for $2,500. If the price index was 36.7 in 1969 and the price index was
235 in 2013, then what is the price of the Firebird in 2013 dollars?
a. $4,609.57
b. $4,957.51
c. $13,508.17
d. $16,008.17

15. Ethel purchased a bag of groceries in 1970 for $8. She purchased the same bag of groceries in 2006 for $25. If the
price index was 38.8 in 1970 and the price index was 180 in 2006, then what is the price of the 1970 bag of groceries in
2006 dollars?
a. $5.39
b. $25.00
c. $29.11
d. $37.11

16. In 1986, Ken bought a Ford Mustang for $8,000. If the price index was 122 in 1986 and the price index was 280 in
2011, then what is the price of the Mustang in 2011 dollars?
a. $3,485.71
b. $8,100.71
c. $18,360.66
d. $22,400.00

17. David earned a salary of $43,500 in 1994 and $89,000 in 2010. The consumer price index was 148.2 in 1994 and
215.3 in 2010. David’s 1994 salary in 2010 dollars is
a. $43,849.05
b. $61,263.43
c. $63,195.34
d. $93,655.50

18. If the CPI was 68 in 1965 and is 285 today, then $100 today purchases the same amount of goods and services as
a. $23.86 purchased in 1965.
b. $32.47 purchased in 1965.
c. $68.00 purchased in 1965.
d. $419.12 purchased in 1965.

19. If the CPI was 127 in 1972 and is 324 today, then $10 in 1972 purchased the same amount of goods and services as
a. $3.92 purchases today.
b. $25.51 purchases today.
c. $207.00 purchases today.
d. $324.00 purchases today.

20. In 1949, Sycamore, Illinois built a hospital for about $500,000. In 1987, the county restored the courthouse for about
$2.4 million. A price index for nonresidential construction was 14 in 1949, 92 in 1987, and 114.5 in 2000. According to
these numbers, the hospital cost about
a. $3.6 million in 2000 dollars, which is less than the cost of the courthouse restoration in 2000 dollars.
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 b. $3.6 million in 2000 dollars, which is more than the cost of the courthouse restoration in 2000 dollars.
c. $4.1 million in 2000 dollars, which is less than the cost of the courthouse restoration in 2000 dollars.
d. $4.1 million in 2000 dollars, which is more than the cost of the courthouse restoration in 2000 dollars.

21. In 1949, Sycamore, Illinois built a hospital for about $500,000. In 1987, the county restored the courthouse for about
$1.7 million. A price index for nonresidential construction was 24 in 1949, 108 in 1987, and 126.5 in 2000. According to
these numbers, the hospital cost about
a. $2.1 million in 2000 dollars, which is less than the cost of the courthouse restoration in 2000 dollars.
b. $2.1 million in 2000 dollars, which is more than the cost of the courthouse restoration in 2000 dollars.
c. $2.6 million in 2000 dollars, which is less than the cost of the courthouse restoration in 2000 dollars.
d. $2.6 million in 2000 dollars, which is more than the cost of the courthouse restoration in 2000 dollars.

Scenario 24-1
The price tag on a tennis ball in 1975 read $0.10, and the price tag on a tennis ball in 2005 read $1.00. The CPI in 1975
was 52.3, and the CPI in 2005 was 191.3.
22. Refer to Scenario 24-1. The price of a 1975 tennis ball in 2005 dollars is
a. $0.03.
b. $0.27.
c. $0.37.
d. $1.00.

23. Refer to Scenario 24-1. In 1975 dollars, a 1975 tennis ball cost $0.10 and a 2005 tennis ball cost
a. $0.27, so tennis balls were cheaper in 1975.
b. $0.27, so tennis balls were cheaper in 2005.
c. $3.66, so tennis balls were cheaper in 1975.
d. $3.66, so tennis balls were cheaper in 2005.

Scenario 24-2
The price tag on a golf ball in 1975 read $0.20, and the price tag on a golf ball in 2005 read $2.00. The CPI in 1975 was
52.3, and the CPI in 2005 was 191.3.
24. Refer to Scenario 24-2. The price of a 1975 golf ball in 2005 dollars is
a. $0.05.
b. $0.53.
c. $0.73.
d. $2.00.

25. Refer to Scenario 24-2. In 1975 dollars, a 1975 golf ball cost $0.20 and a 2005 golf ball cost
a. $0.55, so golf balls were cheaper in 1975.
b. $0.55, so golf balls were cheaper in 2005.
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 c. $7.32, so golf balls were cheaper in 1975.
d. $7.32, so golf balls were cheaper in 2005.

26. Henri earned a salary of $50,000 in 2001 and $60,000 in 2012. The consumer price index was 177 in 2001 and 225 in
2012. Henri's 2001 salary in 2012 dollars is
a. $39,333.33.
b. $74,000.00.
c. $89,333.33.
d. $63,559.32.

27. Henri earned a salary of $50,000 in 2001 and $70,000 in 2006. The consumer price index was 177 in 2001 and 265.5
in 2006. Henri's 2006 salary in 2001 dollars is
a. $35,000.00.
b. $46,666.67.
c. $61,950.00
d. $105,000.00.

28. Janelle earned a salary of $62,000 in 2004 and $80,000 in 2014. The consumer price index was 126 in 2004 and 170 in
2014. Janelle’s 2004 salary in 2014 dollars is
a. $45,953.
b. $89,280.
c. $107,953.
d. $83,651.

29. Janelle earned a salary of $40,000 in 1996 and $65,000 in 2006. The consumer price index was 160 in 1996 and 266 in
2006. Janelle’s 2006 salary in 1996 dollars is
a. $39,097.74.
b. $43,062.50.
c. $68,900.00.
d. $108,062.50.

30. Dewey earned a salary of $75,000 in 2001 and $95,000 in 2006. The consumer price index was 177 in 2001 and 266
in 2006. Dewey’s 2001 salary in 2006 dollars is
a. $37,711.86.
b. $49,906.02.
c. $66,750.00.
d. $112,711.86.

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