Which of the following statements is true?
A. One benefit with any fixed-bundle index as a measure of the cost of living is that it does not account for substitutions that consumers might make in response to price changes.
B. The consumer price index somewhat understates changes in the cost of living.
C. The producer price index is considered to be a leading indicator of future inflation rates.
D. The best overall indicator of inflationary pressures in the economy is the CPI.
Answer: C
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Assuming all else equal, if households are pessimistic about their future income, it is likely to cause a(n):
A) upward movement along their credit demand curve. B) rightward shift of their credit demand curve. C) downward movement along their credit demand curve. D) leftward shift of their credit demand curve.
Calculate the price elasticity of supply for the following goods. Also comment on the elasticity in each case
a) When the price of a good is $100, 200 units are supplied. But when the price increases to $300, 220 units are supplied. b) When the price of a good is $50, 50 units are supplied. But when the price decreases to $30, 10 units are supplied.
________ occurs when individuals conform to the decisions of others
A) Herding B) Anchoring C) Signaling D) Sniping
The value of the slope of a society's production possibility frontier is called its
A. unemployment rate. B. marginal rate of substitution. C. inflation rate. D. marginal rate of transformation.