If there is a 5 percent increase in the CPI, then there will most likely be
A) a more than 5 percent rise in the cost of living because of the introduction of new goods.
B) a 5 percent rise in the cost of living.
C) a less than 5 percent rise in the cost of living because of consumers substituting away from goods whose
relative prices rise towards other goods.
D) a more than 5 percent rise in the cost of living because of consumers substituting away from goods whose
relative prices rise towards other goods.
E) a less than 5 percent rise in the cost of living because of falling quality of goods over time.
C) a less than 5 percent rise in the cost of living because of consumers substituting away from goods whose
relative prices rise towards other goods.
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Which of the following is most likely to lead to an increase of 1% in the nominal demand for money?
A) An increase in real income of 0.5% B) A decrease in real income of 0.5% C) A decline of 1% in the price level D) An increase of 1% in the price level
Equilibrium in a market exists when there is neither a surplus nor a shortage of the item
a. True b. False Indicate whether the statement is true or false