Refer to the information provided in Table 22.5 below to answer the question(s) that follow.
Table 22.5
Refer to Table 22.5. Suppose 2014 is the base year. The price index in 2014 is
A. 1,000.
B. 100.
C. 10.
D. 1.
Answer: B
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Suppose that the expected inflation rate is 3 percent and the actual inflation rate is 6 percent. Then borrowers
A. are worse off and lenders are better off. B. and lenders are both worse off. C. are better off and lenders are worse off. D. and lenders are both better off.
If prices are held above the equilibrium price:
A) social surplus is maximized. B) all firms incur losses. C) there exists a surplus in the market. D) there exists a shortage in the market.
Suppose the government considers placing a tax on business profits o that businesses decrease their production and generate a deadweight loss. Revenues from the tax would be used to boost the incomes of the poor
The decision to levy the tax implies that in this case, the government A) values people but not business. B) values efficiency more than its view of fairness. C) profits from taxes. D) values its view of fairness more than efficiency.
In agriculture, where firms producing similar goods are often located near each other, supervision of neighboring firm activity is fairly easy. When these firms come together formally to agree on price and restraint of output, their organization is called a(n)
a. collusive venture b. cartel c. cooperative d. agricultural merger e. conglomerate