Suppose the price of banana rises over time and consumers respond by buying fewer bananas. This situation contributes to which bias in the consumer price index?
A. substitution bias
B. transportation bias
C. quality bias
D. indexing bias
Answer: A
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The role of the progressive tax system as an autonomous fiscal stabilizer requires that the budget
a. should require actual deficits be equal to zero on average. b. should go into a surplus at appropriate points in the business cycle. c. cannot have a structural deficit component. d. Both a and b e. None of the above
Which of the following is true about average fixed cost?
A. Average fixed cost has a U-shape, and marginal cost crosses average fixed cost at its minimum point. B. Average fixed cost does not vary as output increases. C. Average fixed cost is the difference between marginal cost and average total cost. D. Average fixed cost is total fixed cost divided by the quantity of output produced, and it declines steadily as output increases.
If every time disposable income increases by 5 trillion, consumption increases by 4 billion and saving increases by 1 billion, the MPC and MPS are, respectively,
What will be an ideal response?
Steven lives in a big city where there is a shortage of parking spots. He has a parking spot in his driveway where he parks his car. Which of the following statements is most correct?
A. Steven has a lower opportunity cost of owning a car than his neighbor, who must rent a parking spot. B. The opportunity cost of using the spot is zero, because Steven owns the house. C. The opportunity cost of using the parking spot is the price he could charge someone else for using the spot. D. The opportunity cost depends on how much Steven's mortgage payment is.