In computing a price index,
A. the quantities in the market basket stay the same while the prices differ.
B. the most recent year is always set equal to 1.
C. both the quantities in the market basket and the prices change from year to year.
D. the base year must be one for which the inflation rate was zero.
Answer: A
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An economy has no imports or income taxes. The MPC is 0.75 and real GDP is $120 billion. Businesses increase investment by $4 billion. The multiplier is ________ and the change in real GDP from the increase in investment is ________ billion
A) 5; $16 B) 4; $25 C) 0.75; $3 D) 5; $25 E) 4; $16
In Classical economic theory, full employment is thought to be restored in the long-run because:
a. If unemployment were anywhere but at full employment, the government and central bank would react and have time to move the economy to where it should be. b. The natural forces of supply and demand in the labor force change the real wage and eliminate labor surpluses and deficits. c. Antitrust legislation will have time to take effect and to solve any economic imbalances. d. International organizations, such as the International Monetary Fund, step in to ensure the nation returns to full employment. e. None of the above is correct because Classical economic theory does not believe that an economy will move automatically toward full employment in the long run.
Assuming the economy is experiencing a recessionary gap, classical economists predict that:
a. wages will remain fixed. b. lower wages will shift the short-run aggregate supply curve rightward. c. monetary policy should intervene. d. higher wages will shift the short-run aggregate supply curve leftward.
A circumcision is a surgical procedure to remove:
A. Cowper's gland. B. foreskin of the penis. C. scrotum. D. undescended testicles.