Which measure of inflation best reflects underlying trends in the economy?
A. Core inflation
B. Headline inflation
C. Overall inflation
D. Nominal inflation
A. Core inflation
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Answer the following statements true (T) or false (F)
1. The biggest disadvantage of a sole proprietorship is the lack of distinction between the business and the owner. 2. In a partnership, each partner’s liability is limited to his or her contribution to the partnership. 3. The board of directors has unlimited financial liability for the debts of the corporation. 4. A corporation can raise money by selling stock or bonds.
A firm sells 100 . units per week. It charges $15 per unit, the average variable costs are $10, and the average costs are $25 . The firm should
a. Shut-down as the firm is making a loss of $10,00 . per week b. Shut-down as the firm cannot cover the fixed costs c. Continue operating as the firm is covering all the variable costs and some of the fixed costs d. Shut-down because it is cost effective to pay off the remaining fixed costs
Billie Jean has $120 to spend and wants to buy either a new amplifier for her guitar or a new mp3 player to listen to music while working out. Both the amplifier and the mp3 player cost $120, so she can only buy one. This illustrates the basic concept that
a. trade can make everyone better off. b. people face trade-offs. c. rational people think at the margin. d. decisions made at the margin are not particularly important.
Exhibit 16-5 Money, investment and product markets
In Exhibit 16-5, when the money supply increases from MS1 to MS2, the equilibrium interest rate:
A. decreases from i1 to i2, decreasing investment spending from I2 to I1. B. increases from i2 to i1, increasing investment spending from I1 to I2. C. increases from i2 to i1, decreasing investment spending from I2 to I1. D. decreases from i1 to i2, increasing investment spending from I1 to I2.