The consumer price index (CPI) is a measure of inflation for
A. an elderly couple recently retired to Yuma, Arizona.
B. farmers.
C. a typical consumer of the market basket used to calculate the index.
D. Apple Computer.
Answer: C
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If the price of pizzas has risen from $4 to $5 at the same time that the price of an hour of aerobics class has risen from $20 to $30, then
a. pizzas have become relatively more expensive. b. aerobics classes have become relatively more expensive. c. the relative prices of pizzas and aerobics classes have remained constant. d. workers' real income must have decreased.
Consider the salary of Mary Sue Nelson, a sales agent for Plain Truth Advertising. She has an effort cost of C = e2 and a reservation wage of $1,500 so that wage package is W = 1,500 + 0.2 Q where the CEO sets the incentive at 0.2 and Q = 200 e. If the CEO increases the incentive from 0.2 to 0.25, what happens to Nelson's effort? Will profits rise or fall?
What will be an ideal response?
Rachel left her job as a graphic artist, where she earned $42,000 per year, to open her own graphic arts firm. Her explicit costs for her new business include:
A. only the expenses incurred for office space, equipment, and supplies. B. only her forgone salary of $42,000 per year. C. neither the expenses incurred for office space, equipment, and supplies nor her forgone salary of $42,000 per year. D. both the expenses incurred for office space, equipment, and supplies and her forgone salary of $42,000 per year.
Secular inflation in the United States since 1960 has been most likely be the result of
A. persistent leftward shifts of the aggregate demand curve. B. persistent rightward shifts of the long-run aggregate supply curve. C. persistent rightward shifts of the aggregate demand curve. D. persistent leftward shifts of the long-run aggregate supply curve.