Since there are smaller fluctuations in the equilibrium prices of final goods than in the prices of intermediate goods, the producer price index is more volatile than the consumer price index
a. True
b. False
Indicate whether the statement is true or false
True
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The money-stock target is preferable when uncertainty is the result of unpredictable shifts in which of the following?
a. expectations in future profitability b. Residential construction investment c. the money multiplier d. Both a and b e. All of the above
A decrease in the required reserve ratio will:
a. reduce commercial bank loans and reduce the money supply. b. increase commercial bank loans and reduce the money supply. c. increase commercial bank loans and increase the money supply. d. decrease commercial bank loans and increase the money supply.
Suppose that Family A borrows money when its car breaks down and saves money when the wife receives a holiday bonus from her employer. Suppose that Family B borrows money to buy elaborate birthday presents for the children and spends the husband's holiday bonus on a vacation to Florida. Which of the following is correct?
a. Both Family A's and Family B's spending habits suggest that they base their purchasing decisions on transitory income. b. Family A's spending habits suggest that it bases its purchasing decisions on transitory income rather than permanent income. Family B's spending habits suggest that it bases its purchasing decisions on permanent income rather than transitory income. c. Family A's spending habits suggest that it bases its purchasing decisions on permanent income rather than transitory income. Family B's spending habits suggest that it bases its purchasing decisions on transitory income rather than permanent income. d. Both Family A's and Family B's spending habits suggest that they base their purchasing decisions on permanent income.
Given that most people like the smell of baking cinnamon rolls and dislike the smell of burning tires, baking cinnamon rolls generates ________ externality, and burning tires generates ________ externality.
A. no; a negative B. a positive, no C. a positive; a negative D. a negative; a positive