In year 1 the CPI is 174, and in year 2 the CPI is 190. If Sarah's salary was $49,800 in year 1, what salary in year 2 would cause her to exactly "keep up with inflation"?

If the prices of goods and services were expressed in terms of carved wooden beads, then the carved wooden beads would be serving as a

A) store of value. B) medium of exchange. C) mechanism for transforming present purchases into future purchases. D) unit of account.

A price index like the CPI, which uses a fixed basket of goods from one year to the next, will tend to overstate inflation because

a. producers are likely to change the number of goods they sell from year to year. b. producers will generally reduce the quality of goods as prices increase over time. c. consumers will tend to substitute away from goods that become more expensive. d. consumers will usually reduce their consumption of goods when they become relatively cheaper.