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Checkpoint quiz · Reading Economic Data

Reading Economic Data: Checkpoint 1

Quick checkpoint - five questions on percentage points, averages, growth rates, inflation adjustment, and annualized rates.

Five questions on the core number skills from the first seven lessons: percentage points, averages, growth, inflation adjustment, and annualized rates.

Question 1 of 5 An interest rate rises from 4 percent to 5 percent. Which description is correct?

It rose by 1 percent and by 25 percentage points It rose by 1 percentage point, which is a 25 percent increase It rose by 5 percentage points It rose by 1 percentage point, which is a 1 percent increase

Subtracting gives a change of 1 percentage point; dividing that change by the starting value of 4 gives a 25 percent relative increase.

Question 2 of 5 Five people earn 30,000 dollars each and a sixth earns 3 million dollars. What happens to the mean and the median?

Both stay at 30,000 dollars Both rise to about 525,000 dollars The mean jumps to about 525,000 dollars while the median stays at 30,000 dollars The median jumps while the mean stays the same

The single very large income pulls the mean up sharply, but the middle value - the median - does not move.

Question 3 of 5 Using the rule of 70, roughly how long does it take an economy growing 7 percent a year to double in size?

About 10 years About 7 years About 35 years About 70 years

Dividing 70 by the growth rate of 7 gives a doubling time of about 10 years.

Question 4 of 5 Your pay rises 3 percent in a year while prices rise 5 percent. What happened to your real pay?

It rose by about 8 percent It rose by about 3 percent It stayed the same It fell by roughly 2 percent

Real change is roughly nominal change minus inflation: 3 minus 5 gives about minus 2 percent.

Question 5 of 5 An economy grows 1 percent in one quarter compared with the previous quarter. Its annualized growth rate is closest to:

1 percent About 4 percent About 12 percent It cannot be calculated from quarterly data

Annualizing scales a quarterly change up to a yearly pace; 1 percent a quarter compounded over four quarters is about 4 percent.

← Back to Annualized Rates Next lesson → Seasonal Adjustment

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