The correct answer for each question is indicated by a .

1

Which of the following statements is true about an index?

A)

compares the relative change of value to a base period value.

B)

Must be larger than 100.

C)

Can employ qualitative data.

D)

Cannot assume negative values.

2

For a simple index number, the base period

A)

Appears in the numerator.

B)

Cannot be less than 100.

C)

Appears in the denominator.

D)

Must be any year after 1980.

3

The Consumer Price Index (CPI) is

A)

Reported on a monthly basis.

B)

Reported by the Federal Bureau of Investigation.

C)

An application of Fisher's ideal index.

D)

used to calculate the Dow Jones Industrial Index.

4

A Laspeyres price index

A)

Is a type of simple index.

B)

Is calculated with base period prices in the numerator and denominator.

C)

Uses the same base period as the CPI.

D)

Is calculated with base period quantities in the numerator and denominator.

5

Which of the following is a reason for computing an index?

A)

It is always at least 100.

B)

It is a convenient way of expressing a change in unlike items, such as dollars and bushels.

C)

The base periods may be different.

D)

It estimates the trend in a time series.

6

In 1999 Eastern Publishing, Inc. employed 35 sales representatives. In 2009 they employed 50 sales representatives. Using 1999 as the base period the index for the number of sales representative in 2009 is

A)

50.0

B)

143.0

C)

70.0

D)

0.143

7

The Director of Purchasing reported that the industrial production index was 65. This means production

A)

Increased 35 percent from the base period.

B)

Increased by 35 units from the base period.

C)

Decreased by 35 percent from the base period.

D)

Decreased by 35 units from the based period.

8

An index increased from 120 to 150 from 2004 to 2009. We conclude that this is

A)

An increase of 30 percent.

B)

A decrease of 30 percent.

C)

An increase of 25 percent.

D)

A decrease of 25 percent.

9

If an index of 75 is reported, we conclude that

A)

There has been a decline of 25 percentage points from the base period.

B)

An error was made because an index cannot be less than 100.

C)

There was a 25 percent increase since the base period.

D)

There was a 75 percent increase since the based period.

10

Jon earned $50,000 in 2009, when the Consumer Price Index was 200. If the base period is 1999, what are his earnings in terms of 1999 dollars?

A)

$50,000

B)

$25,000

C)

$100,000

D)

$1,000,000

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