Who ends up paying when sunk costs are incurred as a result of erroneous forecasting?
A) No one pays them because they are sunk.
B) The consumer, because they eventually show up as higher prices.
C) The government, since they fall evenly on the entire community.
D) The taxpayer, because they produce a decline in assessed valuations.
E) Whoever invested in the unsuccessful project.
E
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Expansionary fiscal policy is incapable of solving the underlying problem of a negative real shock. Which of the following problems also makes it difficult to use fiscal policy to combat a negative real shock?
A. The problem of timeliness of fiscal policy B. The problem of crowding out of private spending C. All of these problems make it difficult. D. The problem of targeting fiscal policy
An example of the new goods bias in the CPI is the
A) introduction of higher quality brakes as standard equipment on new cars. B) introduction of hybrid automobiles, vehicles that were not made until recently. C) decreasing popularity of SUVs as the price of gasoline has risen. D) switch from traditional car dealerships to low-cost Internet car buying services.