An advantage of the personal consumption expenditures price index (PCE) over the Consumer Price Index (CPI) as a measure of inflation is that the PCE
A) includes the prices of more consumer goods and services.
B) includes the prices of consumer goods, but not consumer services.
C) includes the prices of consumer services, but not consumer goods.
D) is a fixed market-basket price index that does not allow the mix of products to change each year.
Answer: A
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Which of the following statements is true?
A. No good can be inferior at all levels of income. B. The income elasticity of demand is negative for normal goods. C. It is possible for a good to be inferior at all income levels. D. It is possible for all of the goods a consumer buys to be inferior.
Rising prices help control the process of resource depletion by
A. encouraging consumption and waste. B. stimulating more efficient use of the depletable resource. C. disincentivizing resource-saving innovation. D. stimulating resource imports.
"Mediocre economists often consider only the immediate direct effects of a change, whereas a good economist will also consider indirect effects that may only become observable over time." This statement most clearly emphasizes
A) the law of comparative advantage. B) economizing behavior. C) the importance of secondary effects. D) the gains derived from voluntary exchange.
Capital gains are those gains
A. earned from selling an asset prior to its maturity date. B. earned from avoiding tax payments by understating earnings from capital assets. C. earned from purchasing an asset for less than what it is actually worth. D. earned from selling an asset for a price more than what was paid for it.