The magnitude of the annual overstatement of the CPI is approximately
A. one percentage point.
B. one-tenth of one percentage point.
C. one-half of one percentage point.
D. five percentage points.
Answer: A
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What could explain why a decrease in taxes could lead to a less-than proportionate increase in output ?
A. Consumers may choose to save much of the tax cut in anticipation of having to pay higher taxes in the future. B. As a result of diminishing returns to current consumption, consumers may choose to spread the extra spending over the long term rather than consuming the proceeds of a tax cut all at once. C. A decrease in taxes will necessitate lower government outlays, thus largely offsetting the higher consumption expenditures of households. D. All of the above. E. A and B only
If the percentage change in the price of a good is less than the resulting percentage change in the quantity demanded of that good, then the demand for that good is:
A. unit elastic. B. inelastic. C. elastic. D. perfectly inelastic.
Use the following demand and supply functions: Demand:Qd = 900 - 60PSupply: Qs = -200 + 50PEquilibrium price and output are
A. P = $20 and Q = 150. B. P = $10 and Q = 300. C. P = $100 and Q = 5,300. D. P = $7 and Q = 480.
To “cure” their balance of payments deficits without altering exchange rates, Southeast Asian countries in 1997 were forced to create
A. more inflation. B. recessions. C. faster economic growth. D. money at an accelerated rate.