Indexation refers to
a. a process of adjusting the nominal interest rate so that it is equal to the real interest rate.
b. using a law or contract to automatically correct a dollar amount for the effects of inflation.
c. using a price index to deflate dollar values.
d. an adjustment made by the Bureau of Labor Statistics to the CPI so that the index is in line with the GDP deflator.
b
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Use the following graph showing short-run cost curves for a perfectly competitive firm to answer the next question.
At what minimum price would the firm be willing to produce output in the short run?
A. P1 B. P2 C. P3 D. P4
If the centrally planned economy of Rowboat dismantles central controls before institutions such as property rights are in place, instability will most likely result
a. True b. False
If quantity supplied exceeds quantity demanded, there is a tendency for:
A. price to rise to restore equilibrium. B. price to fall to restore equilibrium. C. the demand curve to shift to the right to restore equilibrium. D. the demand curve to shift to the left to restore equilibrium.
The problem with using foreign exchange rates to convert one country's GDP into dollars is that
A. exchange rates do not reflect differences in inflation rates. B. not all goods and services are sold on world markets. C. the dollar has been losing value over the last twenty years. D. the values of currencies are not comparable.