With respect to the consumer price index, which of the following does not serve as an example of how the substitution bias arises? Between 2010 and 2011, the price of a pound of peanuts
a. rises from $0.80 to $1.00 while the price of a loaf of bread rises from $2.00 to $2.50.
b. rises from $1.00 to $1.30 while the price of a loaf of bread rises from $2.00 to $2.30.
c. remains constant, while the price of a loaf of bread rises from $2.00 to $2.30.
d. falls from $1.00 to $0.80 while the price of a loaf of bread falls from $2.00 to $1.80.
a
You might also like to view...
Suppose that the price of a Big Mac is a good approximation of the price level in the country. A Big Mac costs £2 in London and $3 in New York
a) If purchasing power parity holds, what is the exchange rate between the U.S. dollar and the British pound? b) If the current exchange rate is $1.6 per pound, what is the dollar price of a Big Mac in London? What do you predict will happen to the exchange rate? Explain. c) The exchange rate between the U.S. dollar and the Russian ruble is 30 rubles per dollar. If purchasing power parity holds, what is the price of a Big Mac in Moscow?
An instrument developed to help investors and institutions hedge interest-rate risk is
A) a debit card. B) a credit card. C) a financial derivative. D) a junk bond.