List the three major problems in using the CPI as a measure of the cost of living
(1) Substitution bias. The CPI ignores the fact that consumers substitute toward goods that have become relatively less expensive. (2) Introduction of new goods. Because the CPI uses a fixed basket of goods, it does not take into account the increased well-being of consumers created when new goods are introduced. (3) Unmeasured quality change. Not all quality changes can be measured.
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Explain how changes in foreign income can impact real GDP in a country
What will be an ideal response?
In the long-run, an increase in the budget deficit and an expansionary monetary policy would:
A) increase the price level only. B) increase both the price level and real income. C) increase real income only. D) none of the above.
Which of the following may be used by a plumber's union or a medical professional association to restrict membership?
a. all of the following are correct b. long apprenticeship periods c. difficult qualification exams d. stringent education standards e. high initiation fees
Individuals on opposite sides of the political spectrum typically voice opposite viewpoints on universal access and universal coverage. What is the difference between the two concepts?
a. Republicans typically support universal coverage; Democrats support universal access. b. Universal access guarantees that everyone that wants it has health insurance. c. Universal access usually requires mandatory participation; universal coverage is a voluntary system. d. Universal access means that everyone has access to medical treatment from the provider of his or her choice. e. Universal coverage guarantees that everyone will have access to health insurance coverage.