If a new and better good replaced an older and less expensive good, then the price level measured by the CPI ________
A) is lower than the actual price level
B) is higher than the actual price level
C) might be either higher or lower than the actual price
D) is the same as the actual price level because it measures the prices of the actual goods
B
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Use the following graph to answer the next question.
Suppose the economy is currently in equilibrium at the full-employment real GDP level of Q2.and price level of P2. If an event occurred in the economy that triggered demand-pull inflation, we would expect
A. the price level to move toward P3, and the output level to move toward Q3, B. the price level to move toward P3, and the output level to remain constant. C. the price level to move toward P1, and the output level to move toward Q1, D. the price level to move toward P1, and the output level to remain constant.
If a lender wants a real return of 6 percent and she expects inflation to be 4 percent, which of the following is the correct nominal interest rate to charge?
a. 4 percent b. 6 percent c. 2 percent d. 10 percent e. -2 percent
Changes in technology can increase labor productivity without there being any change in capital stock
Indicate whether the statement is true or false
International specialization allows a country to use its resources to
a. create jobs for government workers by expanding international foreign aid programs b. produce special goods such as computer software that require specific knowledge c. expand the development of its natural resources such as lumber, oil deposits, and coal d. produce specific goods, allowing other countries to focus on the production of other goods e. develop political ties through international cooperation and mutual sharing of goods