# Online Multiple Choice Test

Suppose that the total expenditures for a typical household in 2000 equalled $2500 per month, while the cost of purchasing exactly the same items in 2003 was $3000. If 2000 is the base year, the CPI for the year 2003 equals

If the total expenditures of a typical family equalled $35 000 per year in 2000 and the exact same basket of goods and services cost $40 000 in the year 2003, the family’s cost of living

If a borrower and lender agree to an interest rate on a loan when inflation is expected to be 10% and inflation turns out to be 7% over the life of the loan, then the borrower _____ and the lender ______.

If the nominal interest rate is 8% and the

inflation rate is 3%, then the real interest rate is approximately

The real rate of interest will always be lower than the nominal rate of interest if

Suppose the unemployment rate is 3% and actual output is 2% below potential output. Assuming the text book version of Okun’s Law holds with “Beta” = 2, then