One reason why airlines charge business travelers and leisure travelers different prices is
A) business travelers fly according to schedules that are planned months in advance. Many leisure travelers buy their tickets at the last minute.
B) business travelers fly more often than most leisure travelers. As a result, their employers are able to bargain with airlines for lower fares than leisure travelers pay.
C) business travelers often have inflexible schedules and have to travel on a particular day. The opposite is true for leisure travelers.
D) business travelers usually travel alone. Leisure travelers often fly with friends and family members; therefore, they have a more inelastic demand for airline tickets than business travelers.
C
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In constructing the CPI, the BLS has to deal with commodity substitution bias, which is defined as
A) consumers' substitution of discount stores for full service stores to avoid the higher prices in the full service stores. B) consumers' substitution of cheaper goods for goods whose prices increase. C) the bias from quality changes in existing products that cause prices to increase. D) the bias from new goods being introduced that are more expensive than older goods. E) the bias that arises because the BLS changes the CPI market basket each month.
As commercial banks keep more excess reserves, what happens to money creation?
(A) It remains the same. (B) It could either increase or decrease. (C) It increases. (D) It decreases.