What, if any, is the impact of the CPI bias on government spending?
What will be an ideal response?
About one-third of government outlays, such as Social Security, are linked to the CPI so that these sources of government spending increase when the CPI increases. Because the CPI overstates the actual inflation rate, government spending increases by more than is warranted by inflation. Hence the CPI bias increases the amount of government outlays.
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The increase in the capital stock equals the amount of
A) gross investment. B) depreciation. C) net investment. D) private sector spending.
A law that restricts plant closings will
A) make the economy more efficient by slowing down the movement of resources to a more optimal rate. B) make the economy more efficient by reducing poor decisions on the part of entrepreneurs. C) prevent resources from flowing to their highest-valued uses. D) allow profits and losses to provide a signaling function.
If someone earned $25 million a year acting on a sitcom, the chances are that _____ of that $25 million would be economic rent.
A. none B. a small part C. a large part D. all
The marginal revenue curve of a monopolistically competitive firm will always lie:
A. below the firm's demand curve. B. parallel to the firm's demand curve. C. parallel to the firm's quantity axis. D. above the firm's demand curve.