The price index that measures the prices of goods and services purchased by firms is called the:
A. producer price index.
B. purchasing power index.
C. consumer price index.
D. retail sales index.
A. producer price index.
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Assume that the demand curve for oranges is downward-sloping and the supply curve for oranges is upward-sloping. If the government imposes an excise tax of 10¢ per orange, then the total price (including the tax) that demanders must pay for an orange
a. remains unchanged. b. rises by less than 10¢ per orange. c. rises by exactly 10¢ per orange. d. rises by more than 10¢ per orange.
If the government wants to encourage the consumption of a particular good, they should enact:
A. a subsidy to buyers, since they want to affect consumption of the good. B. a subsidy to sellers, since they want more to be produced and offered for sale. C. a subsidy to buyers, since they deserve the benefit more than the producers. D. a subsidy on either buyers or sellers, since they will both have the same effect on the market.
Suppose your employer offers to match funds you place into a savings plan as long as you purchase the company stock and hold it for at least three years. Which of the following is true?
A) You should not put funds into this plan unless you expect to hold the company stock for at least ten years. B) You should allocate funds into this plan if the company management recommends it. C) It can be attractive to put funds into a plan like this but you should sell your company stock when permitted in order to diversify your portfolio. D) It does not make any sense to put funds into such a plan.
Which of the following is an example of a positive economic statement?
A. The economy's real output increased at about 3 percent last year and the unemployment rate decreased. B. A central bank should not print too much money because inflation could result. C. Congress should stabilize the social security system by raising taxes now. D. The government farm products surplus should be distributed to the needy.