Which of the following is not true about the Consumer Price Index (CPI)?
a. The U.S. income tax system is indexed based on the CPI.
b. The majority of labor union contracts have wages indexed by the CPI.
c. The CPI can be used to transform nominal variables into real variables.
d. The CPI can be used to measure the inflation rate.
e. Social security benefits are indexed by the CPI.
B
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A currency depreciation affects total spending in the short run through expenditure switching, but the net external wealth effect also can influence:
A) other types of expenditure such as consumption or investment. B) the ability of the nation to keep up technologically, since new capital will be more expensive. C) the production function of the home country. D) the ability of the government to conduct monetary policy.
Refer to Figure 18-2. If the government imposes an excise tax of $1.00 on every unit sold, the government's revenue from the tax
A) is larger if the supply curve is S0. B) is identical under either supply curve. C) is larger if the supply curve is S1. D) is not maximized.