Because increases in input prices eventually make it to consumers when they buy the final product, the PPI:
A. is considered a good predictor of future consumer prices.
B. is a lag variable for inflation.
C. accounts for inflation before it reaches consumers, adjusting the CPI downward.
D. accounts for inflation before it reaches consumers, adjusting the CPI upward.
A. is considered a good predictor of future consumer prices.
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Indicate whether the statement is true or false
Which of the following summarizes the limitations of monetary policy?
A. The Fed is most effective at influencing long-term interest rates but is unable to have a short-run impact on the economy. B. The Fed directly sets all interest rates, but no interest rate has any short-run effect on the economy. C. The Fed can directly influence many different interest rates, but it can only influence them a little bit. D. The Fed has a lot of control over just one interest rate, and interest rates influence economic activity in the short run only.
The progressive structure of the income-tax system is based on the:
A. Benefits-received principle B. Principle of diminishing returns C. Ability-to-pay principle D. Principle that "taxes are the price we pay for civilization"
Bella can produce either a combination of 60 silk roses and 80 silk leaves or a combination of 70 silk roses and 55 silk leaves. If she now produces 60 silk roses and 80 silk leaves, what is the opportunity cost of producing an additional 10 silk roses?
A) 2.5 silk leaves B) 10 silk leaves C) 25 silk leaves D) 55 silk leaves