Compared to the GDP deflator, the consumer price index measures:
A) the price of all the goods and services produced in the economy.
B) the price of a fixed market basket of goods and services.
C) the price of exported goods and services.
D) the price of wholesale goods and services.
Ans: B) the price of a fixed market basket of goods and services.
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A newspaper article in commenting on the local electric monopoly tells its readers that the company's dominant economic position as a monopolist allows it to produce whatever output level it desires and to set whatever price it wishes
Critically evaluate this position.
As products become less differentiated:
A. consumers are less willing to switch in response to price changes and competition becomes more intense. B. consumers are more willing to switch in response to price changes and competition becomes more intense. C. consumers are less willing to switch in response to price changes and competition becomes less intense. D. consumers are more willing to switch in response to price changes and competition becomes less intense.
Easy monetary policy and tight fiscal policy lead to
A) high real interest rates. B) low real interest rates. C) roughly unchanged real interest rates. D) roughly unchanged real interest rates only when Ricardian equivalence holds; otherwise, low real interest rates.
A labor intensive production process is one in which:
A. a lot of labor is hired relative to the total inputs needed to produce the good. B. highly skilled labor is needed to produce the good. C. a part of the production process must be done by labor and cannot be substituted. D. total costs will be minimized if labor is the primary factor of production used.