In 1995, the Boskin commission identified which of the following problems with the computation of the CPI?
A) it does not account for the fact that consumers can substitute away from products as they get more expensive
B) an increase in price could be the result of quality improvements rather than an increase in the cost of living
C) it often does not reflect decreases in the cost of living that occur when new goods are introduced
D) all of the above
E) none of the above
D
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Business executives who think the demand for their product is very elastic at the current price are assuming
A) the demand will become less elastic at a higher price. B) they will be able to sell more units at a higher price. C) they will sell fewer units but receive more dollars in sales revenue at a higher price. D) they will sell more units and receive more dollars in sales revenue at a lower price. E) they will sell more units but receive fewer dollars in sales revenue at a lower price.
A price cut will increase the revenue a firm receives if the demand for its product is
A. elastic. B. inelastic. C. unit elastic. D. straight elastic.
When a domestic currency is completely backed by a foreign currency and the note-issuing authority establishes a fixed exchange rate to this foreign currency, then the country is said to have
A) created a currency board. B) undergone dollarization. C) adopted a managed exchange system. D) adopted an exchange rate monetary system.
Refer to Scenario 15.3. Which of the following would raise $X?
A) Lower current income B) Lower expected growth in income C) Lower mortality rates D) Lower interest rates E) Higher age at time of death