Tackle the Test: Free-Response Questions

  1. Question

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    Suppose the year 2000 is the base year for a price index. Between 2000 and 2020 prices double and at the same time your nominal income increases from $40,000 to $80,000.

    Rubric for FRQ 1 (5 points)

    1 point: 100

    1 point: 200

    1 point: 100%

    1 point: It stayed the same.

    1 point: Real income is a measure of the purchasing power of my income, and because my income and the price level both doubled, the purchasing power of my income has not been affected: $40,000/100 = $80,000/200.

  2. Question

    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
    The accompanying table contains the values of the CPI for 2012 and 2013.