Which of the following is true?
a. economic freedom is present if a country is a political democracy.
b. economic freedom ratings indicate the consistency of a nation's institutions and policies with personal choice, freedom of exchange, and protection of private property.
c. economies that are highly free tend to grow less rapidly than those with less economic freedom.
d. all of the above are correct.
B
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Which of the following is correct concerning stock market irrationality?
a. Bubbles could arise, in part, because the price that people pay for stock depends on what they think someone else will pay for it in the future. b. Economists almost all agree that the evidence for stock market irrationality is convincing and the departures from rational pricing are important. c. Some evidence for the existence of market irrationality is that informed and presumably rational managers of mutual funds generally beat the market. d. All of the above are correct.
Suppose the base year of the CPI is 2010, and the CPI calculated for 2012 was 102. What is the correct interpretation of this number?
A. Average prices in the economy have increased by 102 % since 2010. B. Average prices in the economy have increased by 1.9 % since 2010. C. The cost of living for a typical consumer is 2 % higher than it was in 2010. D. The average goods of all consumers has risen an average of 2 % from 2010 to 2012.