A price index is ________.
A. the cost of a market basket of goods and services in a base period divided by the cost of the same market basket in another period
B. a comparison of the current price of a market basket to a fixed point of reference
C. a comparison of real GDP in one period relative to another
D. a ratio of real GDP to nominal GDP
Answer: B
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You have found data that indicates that the income elasticity of demand for generic (unbranded) shampoo is -0.7. You should conclude that generic shampoo:
A. has inelastic demand. B. is below its equilibrium price. C. is an inferior good. D. is a normal good.
The figure above shows the production possibilities frontier for a country. In order for it to move from producing at point A to producing at point B, the country would need to
A) decrease SUV production by 1 million. B) decrease SUV production by 3 million. C) decrease SUV production by 4 million. D) decrease compact car production by 3 million. E) acquire more resources and/or more advanced technology.
If the exchange rate has been $1.50 per British pound but now falls to $1.25 per British pound, there will be
a. more U.S. imports from Great Britain because the price of pounds has fallen b. more exports to Great Britain because the price of pounds has risen c. fewer exports to Great Britain because the price of the pound has risen d. more U.S. exports to Great Britain since the price of the dollar has fallen e. no change in either exports or imports
When the Federal Reserve conducts an open-market purchase, the money supply _____ and aggregate demand _____
Fill in the blank(s) with correct word