The steps involved in calculating the consumer price index and the inflation rate, in order, are as follows:
a. Choose a base year, update the basket, find the prices, estimate the basket's cost, compute the index, and compute the inflation rate.
b. Choose a base year, fix the basket, find the prices, compute the inflation rate, compute the basket's cost, and compute the index.
c. Fix the basket, find the prices, compute the basket's cost, choose a base year and compute the index, and compute the inflation rate.
d. Fix the basket, find the prices, compute the inflation rate, compute the basket's cost, and choose a base year and compute the index.
c
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The self-correcting property of the economy means that output gaps are eventually eliminated by:
A. increasing or decreasing potential output. B. government policy. C. decreasing inflation only. D. increasing or decreasing inflation.
If crowding out exists, the expansionary effect of government spending will be:
a. smaller than intended. b. negative. c. infinite. d. larger than intended. e. zero.
If an economy can produce various combinations of food and shelter along a production possibilities curve (PPC), then if we increase the production of shelter along the PPC, which of the following is true?
a. We cannot change the production of food. b. We must decrease the production of food. This forgone food production represents the opportunity cost of the increase in shelter. c. We also increase the production of food. d. The concept of opportunity cost does not apply along PPC.
The figure above shows the U.S. demand and U.S. supply curves for cherries. At a world price of $2 per pound once international trade occurs, the total exports of cherries from the United States to other nations equals
A) 200,000 pounds. B) 400,000 pounds. C) 600,000 pounds. D) 800,000 pounds. E) 0 pounds.