Suppose OPEC succeeds in raising world oil prices by 300 percent. This price increase causes inventors to look at alternative sources of fuel for internal-combustion engines. A hydrogen-powered engine is developed which is cheaper to operate than gasoline engines. Which problems in the construction of the CPI does this situation represent?
a. substitution bias and introduction of new goods
b. introduction of new goods and unmeasured quality change
c. substitution bias and unmeasured quality change
d. income bias and substitution bias
a
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Everything else held constant, an increase in the required reserve ratio on checkable deposits causes the M1 money multiplier to ________ and the money supply to ________
A) decrease; increase B) increase; increase C) decrease; decrease D) increase; decrease
The difference between the value of a product at the end of one stage of production and the cost of materials purchased from other firms at the beginning of this stage is the
A. value added. B. net input cost. C. production profit. D. gross input cost. E. value of the intermediate product
The direct impact of contractionary monetary policy is to:
A. lower U.S. income, reduce U.S. imports, and lower the value of the dollar. B. raise U.S. income, increase U.S. imports, and raise the value of the dollar. C. raise U.S. income, increase U.S. imports, and lower the value of the dollar. D. lower U.S. income, reduce U.S. imports, and raise the value of the dollar.
Which of the following was not a priority of Soviet planners?
(A) Luxury items for consumers. (B) Space program. (C) Heavy machinery manufacturing. (D) Defense injury.