When the consumer price index rises, the typical family
a. has to spend more dollars to maintain the same standard of living.
b. can spend fewer dollars to maintain the same standard of living.
c. finds that its standard of living is not affected.
d. can offset the effects of rising prices by saving more.
A
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Which of the following statements is true of models?
A) The predictions of a model are referred to as data. B) A model is formulated after developing a hypothesis. C) Models are always based on assumptions that are known to be true. D) It is more important for a model to be simple and useful than to be precisely accurate.
GDP counts only final goods and services because this
A) method avoids including any goods that are produced this year and sold next year. B) method avoids double counting of goods going through several stages of production. C) amount can be more easily determined in the marketplace. D) method avoids understating the value of GDP produced during a given year.
When economists refer to capital, they might mean
a. money b. human skills used in production c. stocks d. bonds e. bank loans
The effective tax rate is
A. The percentage of tax payable on the last dollar of income received. B. Never higher than the nominal tax rate. C. Always equal to the marginal tax rate. D. Equal to the taxes paid divided by taxable income.