One reason economists have begun focusing on the Personal Consumption Expenditure measure for inflation is that the PCE deflator:
A. allows for a changing basket of goods.
B. weights food more because food is a rising percent of expenditures.
C. includes the price of assets such as stock portfolios.
D. takes the exchange rate value of the dollar into account.
Answer: A
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An increase in wages will shift the supply curve up and to the left
Indicate whether the statement is true or false
The discount rate is typically:
A. higher than federal funds rate. B. lower than federal funds rate. C. about the same as federal funds rate. D. determined by the government, and does not correlate with other interest rates.
When the expected value of search increases:
A. the cost of searching falls. B. fewer searches occur. C. more searches occur. D. the number of searches does not change.
The optimal efficiency wage requires
A. firms to pay any wage above the competitive wage. B. firms to pay the competitive wage. C. firms to pay fringe benefits. D. the total product curve to be downward sloping. E. firms to pay the unique wage above the competitive wage such that the elasticity of output with respect to wages equals one.