Related to the Economics in Practice on p. 455: If a retiree's pension is tied to the CPI, her monthly pension check would tend to grow ________ if the pension is tied to the ________ CPI.
A. slower; fixed-weight
B. faster; fixed-weight
C. faster; chain-linked
D. The check would grow at the same rate regardless of the type of CPI to which it is tied.
Answer: B
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Which of the following provides support for the use of discretion in economic policy-making?
A) any policy rule that is based on a particular model will prove wrong if that model is wrong B) the existence of a political business cycle C) the conclusions of Friedman and Schwartz with respect to monetary and fiscal policy D) the Watergate scandal
Why should a perfect competitor produce at which price equals marginal cost?
What will be an ideal response?
Friedman and Phelps concluded that
a. in the long run the Phillips curve is downward sloping, which is consistent with classical theory. b. in the long run the Philips curve is downward sloping, which is inconsistent with classical theory. c. in the long run the Phillips curve is vertical, which is consistent with classical theory. d. in the long run the Phillips curve is vertical, which is inconsistent with classical theory.
Calculating the value of an economy is more complex than just adding up the value of every single thing that is produced because that would lead to:
A. overcounting, as there is a mark-up in everything that is sold. B. undercounting, as only observable markets can be recorded. C. overcounting, as the value of intermediate products would be counted twice. D. undercounting, as most goods are not sold in retail markets.