The type of advertising that is used to induce a consumer to discover a previously unknown taste for an item is known as
A) informational advertising.
B) persuasive advertising.
C) false advertising.
D) experience advertising.
Answer: B
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The bias in the CPI distorts private contracts because
A) a future payment that is linked to the CPI is likely to be raised above the true increase in the price level. B) a worker that links her salary to the CPI is likely to be worse off than a worker that doesn't link her salary to the CPI. C) a lender that links the interest payments on the loan to the CPI is likely to be worse off than a lender that does not link the interest payments on the loan to the CPI. D) a future increase in a payment that is linked to the CPI is likely to be less than the true increase in the price level. E) the CPI cannot properly account for what goods and services a typical urban consumer buys.
Explain the circumstances under which a firm will produce output while incurring a short-run loss, and the circumstances under which it will shut down while incurring a short-run loss
In the short run, a fiscal policy action that results in a reduction in the size of the budget deficit will cause
A. an inflationary gap if the economy was initially operating below full employment. B. an increase in real GDP with stable prices if the economy was below full employment. C. an inflationary gap if the economy was initially operating at full employment. D. a reduction in real GDP with falling prices if the economy was below or at full employment.
For a firm in a perfectly competitive industry, which of the following is TRUE?
A. MR > P B. MR < P C. MR = P D. AVC = ATC