Suppose the value of the CPI is 1.100 in year one, 1.160 in year two, and 1.270 in year three. Assume also that the price of computers increases by 3 percent between year one and year two, and by another 3 percent between year two and year three. The price level is increasing, the inflation rate is ________, and the relative price of computers is ________.
A. increasing; increasing
B. increasing; decreasing
C. constant; decreasing
D. constant; increasing
Answer: B
You might also like to view...
Consumer’s surplus is a measure of how much
A. less than his income a consumer spends on goods. B. more utility a consumer receives from his purchases than he has to pay for them. C. a consumer’s marginal utility differs from his total utility. D. a change in price induces a consumer to substitute other goods.
A firm maximizes profit by operating at the level of output where
A) average revenue equals average cost. B) average revenue equals average variable cost. C) total costs are minimized. D) marginal revenue equals marginal cost. E) marginal revenue exceeds marginal cost by the greatest amount.
For the purpose of determining whether a family is officially considered to be living in poverty, poverty figures do not include:
A. profits of a small business owner. B. food stamps. C. earned income. D. after-tax income of the poor.
Which of the following is most important if the living standards of people residing in a country are going to improve?
A. growth of population B. growth of per capita GDP C. growth of the money supply D. growth of government expenditures as a share of GDP