When consumers substitute a cheaper good for a more expensive one, the CPI will ________ the change in the cost of living.
A. equal
B. precisely measure
C. overstate
D. understate
Answer: C
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Starting from long-run equilibrium, a large increase in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; higher; potential B. recessionary; higher; potential C. recessionary; lower; lower D. expansionary; higher; higher
Once a Nash equilibrium has been found in a game:
A. a stable outcome is impossible. B. the players have no incentive to change their choice. C. the players always have an incentive to change their choice. D. no one in the game can be made better off.
Governments provide public goods because it has which of the following?
a. The ability to force people to use the public good b. Better information about what types of public goods people want c. The ability to ask all the citizens to help pay for the public good d. The ability to force people to pay taxes to cover the cost of the public good
Which of the following statements is true with regard to the Fed's response to the economic crisis of 2008?
a. Although the Fed lowered its interest rates to nearly zero, there are other actions it can take to improve the economy. b. Because the Fed lowered its interest rates to nearly zero, there are no other actions it can take to improve the economy. c. Since the Fed did not lower its interest rates to near zero, there are still other actions it can take to improve the economy. d. none of the above