Which of the following is true about the consumer price index (CPI) and the GDP price index?
a. Both measures weigh prices by quantities consumed in some base year
b. Both yield identical numbers for price level changes for any two years.
c. Both CPI and GDP price index underestimate changes in the price level in an economy.
d. The CPI measures changes in relative prices of goods, while the GDP price index measures changes in the absolute price level of a fixed basket of goods and services.
e. CPI includes products that are widely used, while GDP price index includes all goods and services.
e
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If a central bank does not want to allow the domestic currency to appreciate, it will ________ international reserves by selling its currency, thereby ________ the monetary base and increasing the risk of higher inflation
A) lose; decreasing B) lose; increasing C) acquire; decreasing D) acquire; increasing
A patent
A) always gives rise to a monopoly. B) may not provide a barrier to entry. C) allows the patent owner to capture all of the consumer surplus. D) increases total welfare.
Several writers have helped to popularize the notion that stock prices follow no discernible pattern. What is meant by a random walk, and how can you explain why people continue to invest in stocks if the random walk theory is correct?
What will be an ideal response?
The Federal Reserve's most important function is to change the money supply in order to smooth out the business cycle
a. True b. False Indicate whether the statement is true or false