If we compare the last 30 years of inflation as recorded by the CPI and the PCE price index, we find that the
A) two measures fluctuate together.
B) CPI inflation rate has consistently been at least 5 percentage points above the PCE price index inflation rate.
C) PCE price index inflation rate has consistently been at least 5 percentage points above the CPI inflation rate.
D) two measures give very different inflation rates for most years.
E) the CPI inflation rate was always positive, but the PCE price index inflation rate was frequently negative.
A
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Huge increases in government spending and record low levels of unemployment during the Vietnam War era in the late 1960s led policy makers to fear that
A) the economy was slipping into a recession, which would increase unemployment. B) the economy was growing too fast, which would increase unemployment. C) the economy was slipping into a recession, which would increase inflation. D) the economy was growing too fast, which would increase inflation.
Refer to the scenario above. The seller will earn a revenue of ________
A) $100 B) $300 C) $200 D) $400