The current Medicare system is designed so that it actually encourages
A. lower drug costs for recipients.
B. cost reductions.
C. higher costs of medical services.
D. higher costs only for preventive medical checkups.
Answer: C
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In constructing the CPI, the BLS has to deal with commodity substitution bias, which is defined as
A) consumers' substitution of discount stores for full service stores to avoid the higher prices in the full service stores. B) consumers' substitution of cheaper goods for goods whose prices increase. C) the bias from quality changes in existing products that cause prices to increase. D) the bias from new goods being introduced that are more expensive than older goods. E) the bias that arises because the BLS changes the CPI market basket each month.
Financial contributions to the campaigns of members of Congress, state legislators, and other elected officials by firms that seek special interest legislation that make the firms better off are
A) illegal. B) the result of the voting paradox. C) irrational because elected officials will almost always act in the interest of the voters who have to pay the cost of the legislation. D) examples of rent seeking.
In an economy in which velocity is constant and real output grows at an average rate of 4 percent per year, a 4 percent average rate of growth in the money supply would result in: a. a constant price level
b. a slowly increasing price level. c. a rapidly increasing price level. d. constant real GDP. e. constant nominal GDP.
Sachs and Warner found a strong correlation between a(n) ______ response to trade and economic growth.
Fill in the blank(s) with the appropriate word(s).