An example of the commodity substitution bias in the calculation of the CPI is a price increase in
A) turkey when the price of chicken doesn't rise.
B) a GPS unit versus a AAA map book.
C) a 2014 Toyota Camry versus a 2005 Honda Civic.
D) etexts versus used books bought through Craigslist.
E) new homes because people's incomes have increased.
A
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Assume that the government increases spending and finances the expenditures by borrowing in the domestic capital markets. If the nation has highly mobile international capital markets and a flexible exchange rate system, what happens to the real risk-free interest rate and net nonreserve-related international borrowing/lending in the context of the Three-Sector-Model?
a. The real risk-free interest rate rises, and net nonreserve-related international borrowing/lending becomes more negative (or less positive). b. The real risk-free interest rate rises, and net nonreserve-related international borrowing/lending becomes more positive (or less negative). c. The real risk-free interest rate falls, and net nonreserve-related international borrowing/lending becomes more negative (or less positive). d. The real risk-free interest rate and net nonreserve-related international borrowing/lending remain the same. e. There is not enough information to determine what happens to these two macroeconomic variables.
Figure 8.3 shows a firm's marginal cost, average total cost, and average variable cost curves. At Q = 50, the total cost is:
A. $2,100. B. $2,800. C. $4,500. D. $6,300.