The problems with using the consumer price index as a measure of the cost of living are important because
a. even the appearance of high rates of inflation cause voters to become disenchanted.
b. politicians have manipulated the measurement problems to their advantage.
c. many government programs use the CPI to adjust for changes in the overall level of prices.
d. if the price level is overstated, consumers will be taken advantage of by sellers of consumer goods.
c
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A unit-elastic demand curve never touches or crosses either of the axes. Why?
Refer to the figure below. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen asĀ
A. long-run aggregate supply shifting leftward B. Short-run aggregate supply shifting upward C. Short-run aggregate supply shifting downward D. Aggregate demand shifting leftward
Assuming an decrease in money demand, then to keep interest rates constant the Fed must
a. keep the money supply constant. b. conduct an open market sale of bonds. c. reduce the required ratio. d. both b and c. e. None of the above
A problem of adverse selection can be addressed by
A) by teaching ethics in business schools. B) creating a positive externality. C) government regulation. D) collecting more information.