When the quality of a good deteriorates while its price remains the same, the purchasing power of the dollar
a. increases, so the CPI overstates the change in the cost of living if the quality change is not accounted for.
b. increases, so the CPI understates the change in the cost of living if the quality change is not accounted for.
c. decreases, so the CPI overstates the change in the cost of living if the quality change is not accounted for.
d. decreases, so the CPI understates the change in the cost of living if the quality change is not accounted for.
d
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The tendency for people to behave in a riskier way or to renege on contracts when they do not face the full consequences of their actions is called:
A. moral hazard. B. adverse selection. C. counter information. D. collective bargaining.
In which one of the following currencies is an international loan likely to be measured?
a. German mark b. Japanese yen c. Chinese yuan d. Swiss franc
The forces that make market economies work are
a. work and leisure. b. politics and religion. c. supply and demand. d. taxes and government spending.
Which of the following approaches should the Fed use if it experiences large lags and mistakes in monetary policy?
A. Discretionary policy B. An eclectic approach C.Fixed rules D. Fiscal policy