As currently calculated, the CPI tends to overstate the true inflation rate because
A) we cannot know what the true inflation rate is.
B) it fails to correctly measure quality changes for some products.
C) the market basket selected is inappropriate.
D) the market basket fails to weigh housing costs sufficiently.
B
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Economics is an empirical science, which means that economists
A) must use laboratory experiments to test their theories. B) evaluate a model or theory by whether its assumptions are consistent with the real world. C) try to prove their models are true by referring to logic. D) look for evidence to determine whether the model is useful or not.
Inflation occurs when there is an increase in the purchasing power of money
a. True b. False Indicate whether the statement is true or false
In the short run, a firm attempting to minimize losses:
a. must leave the industry in order to maximize opportunity costs. b. will produce as long as marginal cost equals marginal revenue. c. will produce as long as total revenue exceeds total variable cost. d. will produce as long as total revenue exceeds total fixed cost. e. will produce as long as competitors continue to produce.
When the supply of a good increases and its demand decreases by the same amount: a. Price will change in the same direction as the shift in supply
b. Price will change in the same direction as the shift in demand. c. Quantity exchanged will change in the same direction as the shift in supply. d. Quantity exchanged will change in the same direction as the shift in demand.