If the average price level in 2002 was 1.25 relative to the base year in 1992, then:
a. a dollar in 2002 bought just 80 percent of the goods and services that a dollar bought in 1992.
b. average prices were 80 percent higher in 2002 than in 1992.
c. a dollar in 2002 bought 25 percent more goods and services than a dollar bought in 1992.
d. average prices were 125 percent higher in 2000 than in 1992.
e. purchasing power rose 25 percent between 1992 and 2002.
a
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Moving along the production possibilities frontier itself illustrates
A) the existence of tradeoffs. B) the existence of unemployment of some factors of production. C) the benefits of free lunches. D) how free lunches can be exploited through trade. E) how tradeoffs need not occur if the economy is efficient.
What is the difference between between total costs, variable costs, and fixed costs?
What will be an ideal response?
When the Federal Reserve sells a government security to a commercial bank
A) the cash reserves of the commercial bank decrease. B) the net worth of the commercial bank increases. C) the loans of the commercial bank will increase. D) the balance sheet of the commercial bank is thrown off balance.
If inflation is a threat, then the Fed will be expected to engage in
A) expansionary monetary policy. B) contractionary monetary policy. C) policies to increase the money supply. D) policies to lower the rate of interest.