The Core Personal Consumption Expenditures Index
A. strips out the cost of food and energy from the PCE.
B. also includes producer prices (like the cost of iron ore).
C. only includes food and energy.
D. includes all goods and services people buy (not just what "average" people buy).
Answer: A
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In the United States, where do depository institutions hold their reserves?
A) either as vault cash or on reserve with Federal Reserve district banks B) All reserves must be held at a Federal Reserve district bank. C) in accounts with the U.S. Department of the Treasury D) in their own vaults in the form of precious metals such as gold and silver
Inventory investment can be defined as
A. the value of monetary transactions by businesses. B. goods that must be excluded from the GDP to avoid double counting. C. the system of accounts that is used to count certain goods. D. changes in the stocks of finished goods and raw materials.
A value of the absolute price elasticity of demand equal to 1.5 indicates that
A. a 1% increase in price leads to a 15% decrease in quantity demanded. B. a 2% decrease in price leads to a 25% increase in quantity demanded. C. a 10% increase in price leads to a 15% decrease in quantity demanded. D. a 0.5% decrease in price leads to a 1% increase in quantity demanded.
A government is considering levying an alcohol tax to raise revenue to finance health care benefits. People for the tax argue that alcohol demand is price inelastic. Which of the following statements is true?
A. The alcohol tax may not raise as much revenue as anticipated in the years to come because alcohol demand is more elastic the longer the period of time consumers have to adjust. B. This tax will not raise much revenue either in the short term or the long term because demand is price inelastic. C. This is a very good way to raise revenue both in the short term and in the long term because there are no close substitutes for alcohol. D. No tax revenue can be raised in this way because alcohol sellers will just lower their price by the amount of the tax, and therefore the consumer price of alcohol will not change.