Why isn't the actual level of an index, for example the Dow Jones Industrial Average, very useful on its own?
What will be an ideal response?
For many indexes, the real value is to be able to compute percentage changes in the index over time. For example, the level of the consumer price index by itself conveys little information, but percentage changes in the CPI allow us to measure the rate of inflation. Similarly, in the case of the Dow Jones Industrial Average, the percentages changes are useful in measuring the performance of the stocks (on average) that make up this index.
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Fluctuations in the target interest rate in the New Keynesian model lead to all of the following except
A) procyclical real wages. B) procyclical employment. C) countercyclical prices. D) procyclical consumption.
In a dynamic game, rational players
A) will reject outcomes that are not subgame perfect. B) use backward induction to determine best responses. C) have strategies that select a Nash equilibrium in the game as a whole. D) All of the above.
Suppose you and your friend are in a shopping mall and you borrow $100 from your friend to pay for a pair of shoes that you purchase in a shop. This is an example of
A) direct financing. B) indirect financing. C) moral hazard. D) transaction costs.
You currently sell the same product to both professional plumbers and homeowners, and are able to prevent transfer from one group to the other. Your current prices, quantities sold, and the absolute values of the slopes of the demand curves are as follows: 
If your marginal cost is $10 and you are interested in maximizing your revenues, how would you adjust your prices?
A. Increase plumbers' price and decrease homeowners' price. B. Decrease plumbers' price and increase homeowners' price. C. Increase prices for both groups. D. Decrease prices for both groups.