Price changes from year to year are not proportional, and consumers respond to these changes by altering their spending patterns. The problem this creates for inflation calculations is called
a. deflation.
b. inflation.
c. unmeasured quality change.
d. substitution bias.
d
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In the above figure, the short-run equilibrium is at the price level of ________ and real GDP of ________
A) 100; $15.5 trillion B) 120; $16 trillion C) 110; $15.5 trillion D) 100; $16 trillion
If the account manager finds that the current level of bank reserves is greater than the desired level indicated in the most recent directive from the FOMC, he will
A) order banks to reduce their reserves. B) order banks to raise their interest rates in an attempt to get them to loan out more of their reserves. C) conduct an open market purchase. D) conduct an open market sale.
A situation in which a private cost diverges from a social cost is
A) internal costs. B) an externality. C) an internality. D) a transactions cost.
The short-run shutdown price for a perfectly competitive firm is where price equals
A) minimum ATC. B) AR. C) MR. D) minimum AVC.