In the economic way of thinking, money is
A) the root of all evil.
B) what makes the world go round.
C) a general medium of exchange.
D) an institution, which tends to increase transaction costs.
E) the source of scarcity in commercial society.
C
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If we compare the last 30 years of inflation as recorded by the CPI and the PCE price index, we find that the
A) two measures fluctuate together. B) CPI inflation rate has consistently been at least 5 percentage points above the PCE price index inflation rate. C) PCE price index inflation rate has consistently been at least 5 percentage points above the CPI inflation rate. D) two measures give very different inflation rates for most years. E) the CPI inflation rate was always positive, but the PCE price index inflation rate was frequently negative.
A cartel is a group of firms which agree to
A) behave competitively. B) raise the price of their product. C) lower the price of their product. D) increase the amount they produce.
The most basic cause of unemployment in the United States is that
A) the natural rate of unemployment is much higher than zero. B) we are most of the time producing a real GDP below the natural real GDP. C) we are suffering from low productivity growth. D) we are converting from a predominantly industrial to a predominantly service-based economy. E) policymakers are constantly trying to hold down inflation.
The income effect of a price change is:
A. always consistent with the Law of Demand. B. never consistent with the Law of Demand. C. consistent with the Law of Demand only for normal goods. D. consistent with the Law of Demand only for inferior goods.