The consumer price index (CPI):
A. measures the price of a fixed basket of goods and services relative to the price of that same basket in some base year.
B. measures the price of a basket of goods and services that constantly changes as the composition of consumer spending changes.
C. measures the amount of money that it takes to produce a fixed level of utility.
D. is one of the many statistics in the National Income Accounts.
Ans: A. measures the price of a fixed basket of goods and services relative to the price of that same basket in some base year.
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If the government announces a big tax cut, which of the following combinations of events would be most likely to occur?
a. An upward shift of the aggregate expenditure line, a rightward shift of the money demand curve, and a rightward shift of the aggregate demand curve b. A downward shift of the aggregate expenditure line, a leftward shift of the money demand curve, and a leftward shift of the aggregate demand curve c. An upward shift of the aggregate expenditure line, a leftward shift of the money demand curve, and a rightward shift of the aggregate demand curve d. A downward shift of the aggregate expenditure line, a rightward shift of the money demand curve, and a rightward shift of the aggregate demand curve e. An upward shift of the aggregate expenditure line, a rightward shift of the money demand curve, and a leftward shift of the aggregate demand curve.
Open market operations have their initial effect on bank
a. lending. b. reserves. c. profits. d. revenues.
Monetary neutrality implies that an increase in the quantity of money will
a. increase employment. b. increase the price level. c. increase the incentive to save. d. increase the real interest rate.
The following is an example of the moral-hazard problem: Homebuyers do not properly evaluate the risks involved in buying a home, because they are assuming the government will bail them out of a bad mortgage as it has done before.
Answer the following statement true (T) or false (F)