"The bias in the CPI distorts private contracts because a future payment that is linked to the CPI will be raised above the true increase in the price level." Is the previous sentence true or false?
What will be an ideal response?
The sentence is correct. The fact that the payments increase by more than the true increase in the price level means that one party to the contract benefits more, the higher the inflation rate.
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The above table shows the daily production possibilities for a bakery. Currently the bakery bakes 60 pizzas and 180 loaves of bread, that is at alternative C. Using the above table, moving from alternative C to alternative B, what is the opportunity cost of one loaf of bread?
A. 2 pizza pies
B. 1 pizza pie
C. 0.5 pizza pie
D. 30 pizza pie
Governments track the value of international transactions with ________.
A. the circular flow model B. aggregate demand C. the balance of trade D. the federal deficit
An increase in fiscal deficit spending financed by borrowing will not affect the national debt but decrease interest rates
a. True b. False Indicate whether the statement is true or false
Real GDP evaluates current production using prices that are fixed at past levels and therefore shows how the economy's overall production of goods and services changes over time
a. True b. False Indicate whether the statement is true or false