The Consumer Price Index (CPI):
A. does not suffer from substitution bias because the basket used to measure prices changes every year.
B. answers the question, "How much more does it cost today to buy the same basket of goods and services that were purchased at some fixed time in the past?"
C. understates the impact of price changes.
D. is calculated using a basket of goods and services adjusted annually by government statisticians.
Answer: B
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According to classical economists,
a. money was a "veil" that determined the nominal values in which such variables as the level of economic activity were measured. b. money can have a temporary impact on output. c. it is the nominal interest rates that matters in decisions to save and invest. d. Both a and b e. Both a and c
When the government sets a price floor which is below the equilibrium price
A) a surplus will develop. B) a shortage will develop. C) the equilibrium price will be maintained. D) a price ceiling will follow.
A union can influence the demand for labor by:
a. requiring union fees. b. raising union fees. c. effective advertising that convinces customers to buy the "union label." d. all of these.
A tax that is levied in such a way that low-income taxpayers pay a greater proportion of their income toward taxes than do high-income taxpayers is called a:
A. proportional tax. B. progressive tax. C. regressive tax. D. flat tax.