In an economy, the total expenditures for a market basket of goods in year 1 (the base year) was $5,000 billion. In year 2, the total expenditure for the same market basket of goods was $5,500 billion. What was the Consumer Price Index for the economy in year 2?
A. 120
B. 115
C. 110
D. 100
Answer: C
You might also like to view...
Refer to the figure below. In response to gradually falling inflation, this economy will eventually move from its short-run equilibrium to its long-run equilibrium. Graphically, this would be seen as
A. long-run aggregate supply shifting leftward B. Short-run aggregate supply shifting downward C. Aggregate demand shifting rightward D. Aggregate demand shifting leftward
Refer to the graph above and assume that the areas of the boxes are the same. Consider a situation where price decreases from P2 to P1. In this price range, demand is relatively:
A. inelastic because the gain in total revenue (area J) is less than the loss in total revenue (areas C + F + H). B. inelastic because the loss in total revenue (areas D + G + I + J) is greater than the gain in total revenue (areas C + F + H). C. elastic because the loss in total revenue (areas C + F + H) is greater than the gain in total revenue (area J). D. elastic because the loss in total revenue (area J) is less than the gain in total revenue (areas C + F + H).
The economic theory of supply assumes that
What will be an ideal response?
Holding everything else constant, the more wealth a household has
A. the less it will consume now, but the more it will consume in the future. B. the more it will consume now, but the less it will consume in the future. C. the more it will consume, both now and in the future. D. the less it will consume, both now and in the future.