Substitution bias occurs because the CPI ignores the possibility of consumer substitution toward goods that have become relatively less expensive
a. True
b. False
Indicate whether the statement is true or false
True
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Under the gold standard era of 1870-1914
A) central banks tried to have sharp fluctuations in the balance of payments. B) central banks tried to avoid sharp fluctuations in the current account of the balance of payments. C) central banks tried to avoid sharp fluctuations in the trade account of the balance of payments. D) central banks tried to avoid sharp fluctuations in the capital account of the balance of payments. E) central banks tried to avoid sharp fluctuations in the balance of payments.
If AE > Y, which of the following will NOT occur?
A) inventories will decline B) actual investment will be more than planned investment C) employment will increase D) GDP will increase
Everything else equal, wages are likely to be higher when
a. the location of the job is more desirable. b. the work environment is more prestigious. c. more skill is required to perform well on the job. d. the work is safer.
Suppose that Gigantic Company is increasing in size. As Gigantic Company grows, demand for inputs causes input prices to rise. It is likely that continued growth will result in:
A. economies of scale. B. reduced fixed costs. C. diseconomies of scale. D. increasing marginal returns.