If you have the cost of the CPI market basket at current prices and the cost of the CPI market basket at base period prices, how do you calculate the CPI?
What will be an ideal response?
CPI = × 100.
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Susan quit her job as a teacher, which paid her $36,000 per year, in order to start her own catering business. She spent $12,000 of her savings, which had been earning 10 percent interest per year, on equipment for her business. She also borrowed $12,000 from her bank at 10 percent interest, which she also spent on equipment. For the past several months she has spent $1,000 per month on
ingredients and other variable costs. Also for the past several months she has earned $4,500 in monthly revenue. In the short run, Susan should a. shut down her business, and in the long run she should exit the industry. b. continue to operate her business, but in the long run she should exit the industry. c. continue to operate her business, but in the long run she will probably face competition from newly entering firms. d. continue to operate her business, and she is also in long-run equilibrium.
The experience of the Marcos Presidency in the Philippines in 1986 showed:
A. the importance of keeping the central bank independent from political pressure. B. transparency is critical if people are going to trust a central bank. C. published central bank balance sheets do not always reflect reality. D. all of the answers given are correct.
Refer to the accompanying figure. Assume the market is originally at point W. Movement to point Z is a combination of:
A. an increase in supply and an increase in quantity demanded. B. a decrease in supply and an increase in quantity demanded. C. an increase in demand and an increase in quantity supplied. D. an increase in supply and an increase in demand.
Who makes decisions and trade-offs in the face of scarce resources?
A. Governments B. Individuals C. Businesses D. All of these are correct.