Explain how the CPI is constructed
What will be an ideal response?
The Bureau of Labor statistics surveys 14,000 households to determine their spending habits and to construct a listing or market basket of these goods. The survey is also used to determine the importance of the items in the consumer's budget. Each month the BLS collects the prices of the goods in the market basket from 23,000 stores. A weighted average is taken of those prices, with the more important items receiving higher weights. A base year is chosen and the CPI is set to 100 in the base year. In every other year, the CPI is calculated as the ratio of the cost of the market basket in that year, divided by the cost of the market basket in the base year, times 100.
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Two players are trying to maximize their payoffs in the matrix below: Player 2? Move AMove BPlayer 1Move A (50,20)(40,80)?Move B(25,80)(10,10)What is the Nash equilibrium?
A. Player 1 will Move A and Player 2 will Move A B. Player 1 will Move B while Player 2 will Move B C. Player 1 will Move A while Player 2 will Move B D. Player 1 will move B and Player 2 will Move B
Assume the central bank pursues contractionary monetary policy. What is the first round effect on the value of the domestic currency, if there is low mobility in the international capital markets?
a. The value of the currency rises. b. The value of the currency falls. c. The value of the currency is unaffected. d. The change in the value of the currency is ambiguous.
The Federal Reserve District that covers the largest geographic area is serviced by the Bank located in:
A. Atlant B. San Francisco. C. Richmon D. Chicago.
In the Keynesian model, to understand the determination of income and employment it is necessary to understand
A. how interest rates are determined. B. how aggregate demand is determined. C. how long-run aggregate supply is determined. D. how aggregate supply is determined.