A Consumer Price Index adjustment overcompensates for inflation because it ignores
A) the income effect when relative prices change.
B) the substitution effect when relative prices change.
C) that some goods are inferior.
D) that the substitution effect may offset the income effect.
B
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Consider the perfectly competitive firm in the above figure. What will the firm choose to do in the short-run and why?
A) shut down because the firm incurs an economic loss B) stay in business because the firm is making an economic profit C) stay in business because the firm's economic loss is less than fixed costs D) stay in business because it is making zero economic profit
Suppose that in the absence of trade, the U.S. price for bicycles was higher than the world price for bicycles. Would allowing international trade mean that the United States would import or export bicycles? Who in the United States would benefit and who would lose with a free trade policy, and would the gains be greater than the losses?
If a market switches from being a perfectly competitive market to being a monopoly market, the decrease in consumer surplus is more than offset by an increase in producer profits.
Answer the following statement true (T) or false (F)
The primary difference in certificates of deposit (CDs) that are equal to or less than $100,000 and those over $100,000 (other than the amount) is:
A. CDs equal to or less than $100,000 are issued for only six months or less. B. a bank does not have to include CDs equal to or less than $100,000 in its liabilities. C. CDs greater than $100,000 are issued for only six months or less. D. CDs greater than $100,000 are negotiable and therefore can be bought and sold.