A reason why the CPI overstates the cost of living is that the
A. BLS audits prices in the same types of stores, rather than shift to cheaper outlets.
B. CPI makes no attempt to ascertain what average people buy.
C. CPI makes no attempt to update the market basket.
D. CPI only measures the effects of inflation on the poor.
Answer: A
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Describe the differences between the growth rates of real personal consumption and real gross private investment in the United States
What will be an ideal response?
In contrast with nominal values, real values refer to nominal values
A) corrected for price changes. B) minus personal income taxes. C) minus interest rates. D) corrected for hours of work.
Suppose that a German citizen crosses the border each day to work in Switzerland. Her income from this job would be counted in:
a. Swiss GNP and German GNP. b. Swiss GNP and German GDP. c. Swiss GDP and German GNP. d. Swiss GDP and German GDP.
Whenever a firm can charge a price greater than marginal cost
A) the firm must be a monopolist. B) there is some loss of economic efficiency. C) consumers have the ability to choose a close substitute. D) the firm will earn economic profits.