Because the CPI is based on a fixed basket of goods, the introduction of new goods and services in the economy causes the CPI to overestimate the cost of living. This is so because
a. new goods and services are always of higher quality than existing goods and services.
b. new goods and services cost less than existing goods and services.
c. new goods and services cost more than existing goods and services.
d. when a new good is introduced, it gives consumers greater choice, thus reducing the amount they must spend to maintain their standard of living.
d
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Refer to Figure 9-5. The increase in domestic producer surplus as a result of the tariff is equal to
A) $11.25 million. B) $18 million. C) $32.5 million. D) $45 million.
Figure 11-5
Crown Theater is the only movie theater in the city. Its cost and revenue curves are shown in Figure 11-5. Monopolist Crown Theater would set the price of its tickets at
A. $7.50. B. $6.00. C. $4.50. D. $3.00.
Those economists who view the AS curve as being vertical see more government tools capable of raising Real GDP than do the economists who view the AS curve as being upward-sloping
Indicate whether the statement is true or false
If the Federal Reserve wants to increase the availability of money and credit, it can:
A. lower the discount rate. B. raise the reserve requirements. C. sell U.S. government bonds to the public. D. encourage banks to increase their prime lending rate.