In the basket of goods that is used to compute the consumer price index, which of the following categories of consumer spending is the smallest?
a. food & beverages
b. recreation
c. housing
d. apparel
d
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Which of the following average cost functions suggests the presence of a natural monopoly?
A) AC = 2 B) AC = 100/Q + 2 C) TC = 100/Q + 2Q D) All of the above.
To practice third-degree price discrimination, each of these market conditions must be met except which one?
A) All consumers must have the same own price elasticity of demand. B) No arbitrage opportunities can exist between customer groups. C) The firm must be able to determine in which group each customer belongs. D) The firm must have market power.
From 2007 to 2008, the Federal Reserve System reduced interest rates, the price that borrowers pay. As a result, economists expected demand for money to
a. increase. b. decrease. c. not change. d. be influenced by the interest rate, but with an uncertain effect.
Soon after he became the chairman of the Federal Reserve System in 1979, Paul Volcker embarked on a course
a. of accommodative monetary policy. b. of disinflation. c. that was designed to reduce the unemployment rate. d. that produced results that were clearly consistent with those predicted by rational-expectations theorists.