The practice of increasing a nominal quantity each period by an amount equal to the percentage increase in a specified price index is called:
A. the Fisher effect.
B. deflating.
C. indexing.
D. a substitution bias.
Answer: C
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The central idea behind comparative advantage is that a nation should
A. specialize in the product that it can produce with the lowest opportunity cost. B. compare its market economy with other nations. C. use money as a medium of exchange to facilitate specialization and trade. D. pursue investment in capital goods as a means of stimulating economic growth.
If all resources were perfectly adaptable for alternative uses, the production possibilities curve would
A) be bowed out. B) be bowed in. C) be a straight line. D) not exist.
Over the two-year period during which the financial crisis occurred, the amount of assets in the Federal Reserve balance sheet increased by:
A. 6 times. B. 3 times. C. 4.5 times. D. 2.5 times.
If firms seek an average markup of 25% over labor costs and workers demand real hourly wages equal to $10 – 100u where u is the unemployment rate, then the equilibrium rate of unemployment will be
a) 4.6% b) 8% c) 9.2% d) 10% e) 25%