One of the consequences of the overstatement of the CPI is that
A. the poverty line is lower than it would otherwise be.
B. Social Security taxes are lower than they would otherwise be.
C. Social Security payments are higher than they would otherwise be.
D. personal income taxes are higher than they would otherwise be.
Answer: C
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The value of GDP calculated by the expenditure method: a. includes inflation, while the value of GDP calculated by the income method excludes inflation. b. excludes inflation, while the value of GDP calculated by the income method includes inflation. c. is always equal to the value of GDP calculated by the income method
d. is always greater than the value of GDP calculated by the income method.
The best definition of inflation is
a. a temporary increase in prices. b. an increase in the price of one important commodity such as food. c. a persistent increase in the general level of prices as measured by a price index. d. an increase in the purchasing power of the dollar.
Other things equal, when Europeans want to buy more grains from the United States:
a. U.S. imports will increase.
b. European exports will increase at every level of domestic income.
c. U.S. exports will increase at every level of domestic income.
d. the U.S. balance of payments will show a deficit.
e. U.S. consumption spending will fall.
The law of supply states that there is
A) an inverse relationship between price and technology, ceteris paribus. B) a direct relationship between profit and quantity supplied, ceteris paribus. C) no relationship between price of resources and number of suppliers, ceteris paribus. D) a direct relationship between price and quantity supplied, ceteris paribus.