For perfectly price inelastic supply,
A. either supply or demand may set the price.
B. price is solely determined by demand.
C. only a government can set the price.
D. price is solely determined by supply.
Answer: B
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Substitution bias in the CPI refers to the fact that the CPI
A) takes into account the substitution of goods by consumers when relative prices change. B) takes no account of the substitution of goods by consumers when relative prices change. C) substitutes quality changes whenever they occur without taking account of the cost of the quality changes. D) substitutes relative prices for absolute prices of goods.
The majority of money is created when
A) banks make loans. B) new coins are minted. C) the federal government borrows from the public. D) the Fed sells bonds.
Key determinants of economic profit include ________
A) the revenue from selling goods and services B) the cost incurred in buying capital C) the cost of hiring labor D) all of the above E) none of the above
As the interest rate increases, ceteris paribus, the trade-off between present and future consumption
A. Encourages less saving. B. Makes it more appealing to sacrifice current consumption. C. Is not affected. D. Makes it less appealing to sacrifice present consumption.