Which of the following is an example of an expectation of inflation?
A. Producers expect their prices on average to be higher next year.
B. Producers expect the prices they pay for raw materials to be higher next year.
C. Workers expect that the prices they pay for goods and services will be higher next year.
D. All of these are correct.
Answer: D
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Scarcity and shortages differ in that
A) scarcity is caused by natural disasters and shortages are caused by mistakes people make. B) scarcity is a condition of human life while shortages are usually temporary phenomena related to an imbalance between the amount desired and the amount produced. C) scarcity is a type of shortage but shortage is a broader concept. D) shortages apply to resource markets while scarcity applies to product markets.
Which approach to calculating GDP is especially useful in clarifying the resale of existing goods?
A. The expenditure approach B. The income approach C. The value-added approach D. Any of these measurements will allow that kind of clarification equally well.
Publicly available data on production costs and box office revenues reflect that:
a. R-rated movies on an average collect higher revenues than G-rated movies. b. revenue collected by PG-rated movies donot cover the production and distribution costs. c. G-rates movies help investors to make artistic or polictical statements. d. family-rated movies are on average profitable.
The effect of substitution bias is that the rise in the price of a fixed basket of goods over time tends to ___________________ the rise in a consumer’s true cost of living, because it doesn’t take into account that the person can substitute between goods according to changes in their relative prices.
a. stabilize b. understate c. overstate d. reduce