The effect of substitution bias is that the rise in the price of a fixed basket of goods over time tends to ___________________ the rise in a consumer’s true cost of living, because it doesn’t take into account that the person can substitute between goods according to changes in their relative prices.
a. stabilize
b. understate
c. overstate
d. reduce
c. overstate
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Analysis that aims at determining only the economic consequences of a particular policy is called ________ analysis.
A. fiscal B. normative C. monetary D. positive
The Japanese banking system went through a cycle of ________ in the 1990s similar to the one that occurred in the U.S. in the 1980s
A) regulatory forbearance B) policy antagonism C) regulatory ignorance D) policy renewal
When the excess capacity problem under monopolistic competition becomes greater, there will be:
A. a wider range of consumer choice. B. fewer advertisements and promotions. C. more entry by firms into the market. D. a narrower range of consumer choice.
Which of the following is NOT true?
A. The notion of perfect equilibrium is more useful in analyzing extensive-form games than normal-form games. B. An extensive form representation usually provides more information than a normal-form representation of a game. C. A normal-form game is most useful for sequential-move games. D. The notion of credible threats makes more sense in extensive-form representations than in normal-form representations of a game.