The price index for a market basket of goods can be found by
A. dividing the value of the market basket by the rate of inflation.
B. multiplying the base-year cost of the basket by the current-year cost of the basket divided by 100.
C. dividing the current-year value of the market basket by the base-year value of the basket and multiplying the result by 100.
D. multiplying the value of the market basket by the rate of inflation.
C. dividing the current-year value of the market basket by the base-year value of the basket and multiplying the result by 100.
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When we examine the U.S. money supply, the smallest component of M1 is
A) currency and coins. B) transaction deposits. C) certificates of deposit. D) traveler's checks.
In an economy in which velocity is constant and real output grows at an average rate of 3 percent per year, a 5 percent average rate of growth in the money supply would result in a
a. constant price level. b. low (approximately 2 percent) rate of inflation. c. decline in the general level of prices at an annual rate of approximately 2 percent. d. rate of inflation of approximately 8 percent.
An economy produces two goods, x and y. A year ago the price of x was $4 and the price of y was $6 . Today the price of x is $8 and the price of y is $10 . What happened to the nominal and the real value of good x? What happened to the nominal and real value of good y?
Most economists believe that technology ______.
a. drives productivity and growth b. increases natural resources c. hinders physical capital d. limits free markets