Economists believe that the CPI overstates actual price changes by as much as ________ to ________ percent each year.
A. 1; 2
B. 2; 3
C. 0.5; 1
D. 0.5; 1.5
Answer: D
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Would the services supplied by prostitutes and brothels be included in calculating GDP in the United States?
A) Yes, because those are final services. B) Yes, but only in those states where brothels are legal. C) No, because those services are immoral. D) No, because those are not truly economic services.
Assume that the Fed lowers the required reserve ratio. How will this affect the money supply?
a. It would decrease. b. It would increase. c. It would remain unchanged. d. It depends on the value of interest rates.
Use the following diagrams to answer the next question.
Assume the economy is on aggregate demand AD1. The Fed should attempt to raise investment by enough to shift aggregate demand from AD1 to ________.
A. AD2 and then to AD3 B. AD3 and then to AD4 C. AD4 and then to AD3 D. AD3 and then to AD2
Other things equal, an improvement in productivity will:
A. increase the equilibrium price level. B. shift the aggregate supply curve to the left. C. shift the aggregate supply curve to the right. D. shift the aggregate demand curve to the left.