Name: Quiz 2 Unit 2 1. If the Consumer Price Index rises from 300 to 333 in a particular year, the rate of inflation in that year is: a. 11 percent b. 33 percent c. 91 percent d. 10 percent 2. A price index is: a. a comparison of the price of a market basket from a fixed point of reference b. a comparison of real GDP in one period relative to another c. the cost of a market basket in a base period divided by the cost of the same market basket in another period d. a ratio of real GDP to nominal GDP 3. If the price index is 130, this means that: a. price are 130 percent higher than in the base year b. prices are .13 times higher than in the base year c. prices are 30 percent higher than in the base year d. nominal GDP must be inflated to determine the real GDP 4. The CPI is reported once every a. year b. quarter c. month d. week e. other year 5. TRUE or FALSE: The commodity substitution bias refers to the ongoing replacement of old goods by new goods.