The GDP deflator
A. Is the price index based on a fixed basket of goods and services for the government.
B. Is the broadest price index, covering all output.
C. Is the best measure of inflation for consumers.
D. Reflects the price changes felt by producers but not consumers.
Answer: B
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When economic profits are zero for a firm, it means that:
A. no firms will enter or exit the industry. B. average revenue slightly above average total cost. C. average variable costs are minimized. D. accounting profits are also zero.
When a firm experiences diseconomies of scale,
a. short-run average total cost is minimized. b. long-run average total cost is minimized. c. long-run average total cost increases as output increases. d. long-run average total cost decreases as output increases.
When the price of gasoline? rises, some consumers begin riding their bikes more frequently or riding the bus instead of driving their cars. The fact that the CPI does not fully account for such changes in consumer behavior is called
A) increase in quality bias. B) outlet bias. C) substitution bias. D) discrimination bias.
Along a production possibilities curve, an increase in the production of one type of good can be accomplished only by:
A. decreasing the price of the other type of good. B. increasing the production of the other type of good. C. holding constant the production of the other type of good. D. decreasing the production of the other type of good.