What is the consumer price index? How is it different from the GDP price index?
What will be an ideal response?
The consumer price index (CPI) is a price index that measures the ratio of the current price of a market basket of goods and services in a base period to a market basket of the same goods and services in a current period. It is designed to measure the cost of a constant standard of living. The market basket includes some 300 goods bought by the typical urban consumer. The GDP price index compares the price (or cost) of goods and services that make up GDP in a specific year to the price of the same set of goods in a reference year. The GDP is a much broader measure that includes consumer goods and services, capital goods, goods and services purchased by government, and goods and services entering world trade.
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In the circular flow model, the factor markets are the markets in which
A) consumption goods and services are bought and sold. B) government goods and services are provided. C) land, labor, capital, and entrepreneurship are bought and sold. D) investment goods and services are bought and sold. E) governments impose all their taxes.
When a minimum wage is ________, the firms' surplus and workers' surplus shrink, a deadweight loss ________, and resources are lost in job search
A) inefficient; arises B) inefficient; disappears C) efficient; arises D) efficient; disappears E) nonexistent; arises
The first labor unions in the United States were
A) public-sector unions. B) industrial unions. C) guilds. D) craft unions.
What is the money multiplier?
a) A measure of the potential or maximum amount the money supply can increase when new deposits enter the system. b) A measure of the amount of excess reserves banks hold. c) A measure of the amount of total reserves banks hold. d) A measure of the maximum amount of savings that can happen when account holders deposit money in a bank account.