Of the alternative measures of the price level, _________ overcomes the bias of the CPI and is a better measure of the cost of living because it _________
A. GDP price index; uses a current basket
B. PCE price index; uses a current basket of all consumption goods
C. PCE price index excluding food and energy; is less volatile
D. GDP price index; includes all goods and services bought by Americans
B The PCE is based on the current consumption bundle and thereby avoids the biases in the CPI.
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Unanticipated inflation will hurt ________ and help ________
A) pensioners; borrowers B) borrowers; pensioners C) the government; tax payers D) homeowners; banks
The price system rations goods among consumers in such a way that
A. all are treated equally. B. all needs are satisfied. C. the rich are favored. D. important needs are satisfied first.
A Pigovian tax imposed on consumers ________ the price, and if the same tax were imposed on producers, it would ________ the price.
A. decreases; increase B. increases; decrease C. decreases; decrease D. increases; increase
A primary financial market is:
A. one in which newly issued securities are sold. B. a market only for AAA rated Securities. C. a market just for corporate stocks. D. the New York Stock Exchange.