The urban consumers that the CPI is based on includes:
A. institutionalized persons.
B. persons in the military.
C. incarcerated persons.
D. the CPI does not include any of these.
Answer: D
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In the short run, when the Fed decreases the quantity of money
A) bond prices fall and the interest rate rises. B) bond prices rise and the interest rate falls. C) the demand for money increases. D) the supply of money curve shifts rightward.
If assets are relatively _____, and uncertainty is _____, transactions usually take place in markets
a. specific; quite low b. nonspecific; quite low c. specific; quite high d. nonspecific; quite high
For most of the Fed's history, the Fed:
A. found banks would borrow from the Fed far more often than they would borrow in the federal funds market. B. tied the discount rate to the rate on Treasury securities. C. was very lenient in making discount loans. D. lent reserves at an interest rate below the target federal funds rate.
The rational-expectations hypothesis suggests that the forecasts that people make concerning future inflation rates
A. consistently underestimate the actual rate of inflation in the future. B. consistently overestimate the actual rate of inflation in the future. C. are always correct. D. are correct on average, but are subject to errors that are distributed randomly.