If the basket of goods and services used to calculate the CPI cost $200 in the reference base period and $450 in a later year, the CPI for the latter year equals
A) 200.
B) 225.
C) 325.
D) 450.
B
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When the price level decreases, ________.
A. holders of financial assets with fixed money values decrease their spending B. the demand for money falls and the interest rate falls C. there is a decrease in consumer spending that is sensitive to changes in interest rates D. holders of financial assets with fixed money values have less purchasing power
The figure below shows the demand for items from a warehouse club. All of the people who shop at the warehouse club have the same demand. If the managers set a single price, so that all customers pay the same price for every item they buy, the firm makes an economic profit of ________ and if the managers use two-part pricing, the firm makes an economic profit of ________.
A) $40 million; $80 million
B) $60 million; $80 million
C) $40 million; $60 million
D) $0; $80 million
The Fed can force the banking system to decrease the money supply by tightening monetary policy, but it cannot force the banking system to increase the money supply by loosening monetary policy
a. True b. False Indicate whether the statement is true or false
"Purchasing power" of money:
a. Is the value of money measured in terms of how many goods and services it will buy. b. Is the value of a currency expressed in a foreign currency. c. By definition, falls over any given period of time. d. Is the value of money adjusted for price differences among countries. e. Correlates positively with the inflation rate.