Which of the following would be a consequence of substitution bias in the CPI?
A) Judges would award child support payments that would not adequately keep up with the true cost of inflation.
B) Businesses would overcompensate employees for inflation when giving cost of living raises.
C) Social Security payments would not adequately compensate retired workers for inflation.
D) The inflation rate based on the CPI would underestimate the true level of inflation.
B
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Capital goods are counted the same as consumer goods in the national product accounts
a. True b. False Indicate whether the statement is true or false
The U.S. Secretary of the Treasury met with the Japanese Finance Minister to discuss possible cuts in the Japanese discount rate. The likely outcome of currency speculation in response to this news is that
a. the dollar will depreciate. b. the dollar will appreciate. c. the yen will appreciate. d. both the dollar and yen will appreciate.
Which of the following examples would most likely use advertising?
a. A firm sells a product with low differentiation. b. A firm sells a homogeneous product. c. A firm sells a product with many substitutes. d. A firm sells a product with few substitutes.
Technological improvements cause
A. Existing firms to produce more output. B. Some firms to exit but the remaining firms to produce more output. C. New firms to enter but existing firms to continue producing their old output levels. D. Existing firms to continue producing their old output levels but to lower the price of the products.