The substitution bias in the consumer price index refers to the
a. substitution by consumers toward new goods and away from old goods.
b. substitution by consumers toward a smaller number of high-quality goods and away from a larger number of low-quality goods.
c. substitution by consumers toward goods that have become relatively less expensive and away from goods that have become relatively more expensive.
d. substitution of new prices for old prices in the CPI basket of goods and services from one year to the next.
c
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The demand for automobiles fell when gasoline prices increased. Which of the following is likely to happen in this case, assuming all else equal?
A) The labor demand curve of automobile companies will shift to the left. B) The labor demand curve of automobile companies will shift to the right. C) The supply of labor to the automobile industry will decrease. D) The supply of labor to the automobile industry will increase.
David takes 10 minutes to process a customer, and 20 minutes to stock the shelves. Danny takes 15 minutes to process a customer, and 15 minutes to stock the shelves. Which of the following statements is true?
A) Danny has a comparative advantage in processing customers and in stocking shelves. B) David has a comparative advantage in processing customers but not in stocking shelves. C) Danny has an absolute advantage in performing both tasks. D) Danny has a comparative advantage in processing customers but not in stocking shelves. E) David has an absolute advantage in performing both tasks.
Which of the following does NOT contain an externality?
A) I sell you an ice cream and you drip it all over the person sitting next to you. B) I sell you an ice cream and it gives you a headache. C) I sell you an ice cream and you share it with your friend. D) I give you an ice cream and you share it with a friend.
Between 1998 and 2001, the federal budget was:
a. never in surplus. b. never in deficit. c. in surplus. d. in surplus about as often as it was in deficit.