What is one way to adjust the CPI for substitution bias?
A) Use the Paasche index.
B) Use the Laspeyres index.
C) Multiply the Paasche Index and the Laspeyres index.
D) Take the geometric mean of the Paasche index and the Laspeyres index.
A
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Refer to Figure 5-1. If, because of an externality, the economically efficient output is Q2 and not the current equilibrium output of Q1, what does S1 represent?
A) the market supply curve reflecting marginal social cost B) the market supply curve reflecting implicit cost C) the market supply curve reflecting external cost D) the market supply curve reflecting marginal private cost
Suppose you received a 5 percent increase in your nominal wage. Over the year, inflation ran about 2 percent. Which of the following is true?
a. Your real wage increased. b. Your nominal wage decreased. c. Both your nominal and real wages decreased. d. Although your nominal wage rose, your real wage decreased.