List three different price indices and explain how they differ in terms of the market basket on which they are based
What will be an ideal response?
Three examples of price indices are the GDP deflator, the consumer price index, and the producer price index. All three differ by the kinds of goods that are contained in the market basket that is used to calculate the average level of prices. The GDP deflator is based on the average price of all final goods and services produced. The consumer price index is based on the average price of 211 goods/services purchased by the typical urban family of four. The producer price index is based on the prices received by producers of goods and services at all stages of the production process.
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Which of the following will not cause a short-run shift in the supply curve?
A) a change in the number of sellers B) a change in the cost of resources C) a change in the price of the product D) a change in future expectations
Taken as a whole the balance of payments:
a. Is usually positive when a nation is healthy and negative when it is weak. b. Is usually negative when the nation is healthy and positive when it is weak. c. Must equal zero. d. Must equal GDP minus personal consumption expenditures. e. Can be positive or negative. It does not depend on the health of the country.
If Spain sells soccer balls to the United States, then Spain:
A. has an absolute advantage over the United States in making soccer balls. B. has the ability to produce soccer balls at a lower opportunity cost than the United States can. C. does not have any trade barriers with the US. D. can produce more soccer balls than the United States given the same resources.
When the price level decreases, the resulting _______ in the interest rate will _____ investment.
a) decrease; increase b) decrease; decrease c) increase; increase d) increase; decrease e) none of the above