What is the best definition of quality bias?
a. failure to capture the savings that households enjoy when they change their spending
in response to relative price changes
b. failure to account for price changes to an item that result from product improvement
c. overstating of the prices some buyers actually pay for goods from cheaper retail
outlets
d. failure to include new products into the Consumer Price Index until they become
commonplace
b. failure to account for price changes to an item that result from product improvement
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When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline
The Bureau of Labor Statistics' "employed" category includes those who worked as paid employees, worked in their own business, or worked as unpaid workers in a family member's business
a. True b. False Indicate whether the statement is true or false
Luigi is willing to lend Klaus $5,000 for one year at a nominal rate of interest of 7%. Both Luigi and Klaus expect the rate of inflation to be 2% in the next year. If the actual rate of inflation over the year was 1%, what is the real return did Luigi receive?
A. 4% B. 5% C. 8% D. 6%
When firms hold excess labor, the value of the multiplier increases.
Answer the following statement true (T) or false (F)