Which of the following is not a widely acknowledged problem with using the CPI as a measure of the cost of living?
a. substitution bias
b. introduction of new goods
c. unmeasured quality change
d. unmeasured price change
d
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The founding of the U.S. FDIC was primarily in response to
A) serious inflation after the Civil War. B) the bank panic of 1907. C) the Great Depression. D) the Volker recession in 1981-1982.
A good is said to be a normal good when
a. decreases in income lead to an increase in demand for the good b. decreases in income lead to a decrease in demand for the good c. increases in income lead to a decrease in demand for the good d. increases in price lead to a decrease in the quantity demanded of the good e. increases in price lead to a decrease in demand for the good
In a fixed exchange rate regime, which of the following policies could lead to a greater trade deficit and leave aggregate demand constant?
A) Devalue the currency. B) Increase government spending. C) Decrease government spending. D) Decrease government spending and devalue the currency. E) Increase government spending and revalue the currency.
In an open economy with few capital restrictions and substantial import-export trade, a rise in interest rates and a decline in the producer price index of inflation will
a. raise the value of the currency b. lower the nominal interest rate c. increase the volume of trading in the foreign exchange market d. lower the trade-weighted exchange rate e. increase consumer inflation.