The consumer price index is
a. a measure of the increase in the average price of all of the goods that are included in the calculation of GDP.
b. a comparison of the cost of buying a typical bundle of goods during a given period with the cost of buying the same bundle during an earlier base period.
c. the ratio of the average price of a typical market basket of goods compared to the cost of producing those goods during the previous year.
d. a comparison of the cost of the typical bundle of goods consumed in period 1 with the cost of a different bundle of goods typically consumed in period 2.
B
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Americans viewed the 12 percent mortgage interest rates of the 1980s as exorbitantly high while they considered the 7 percent mortgage interest rates of the late 1990s as reasonable. This represents a confusion of
A. actual and expected inflation. B. real versus nominal inflation. C. real versus expected mortgage payments. D. real versus nominal interest rates.
To a firm facing constant input prices, increasing marginal returns
a. means that each additional unit of output costs more to produce than the previous unit b. means that the marginal product of the variable input decreases as more of the input is used c. can occur due to specialization and division of labor d. usually occur at very high rates of output e. can never occur
Because of product differentiation, a monopolistically competitive firm: a. possesses some degree of market power
b. is very similar to a perfectly competitive firm. c. faces a perfectly elastic demand curve. d. is unaffected by the elasticity of demand.
A decrease in federal income tax rates is an example of fiscal policy that affects GDP through consumption adjustments
a. True b. False Indicate whether the statement is true or false