Of the alternative measures of the price level, _________ overcomes the bias of the CPI and is a better measure of the cost of living because it _________
A. GDP price index; uses a current basket
B. PCE price index; uses a current basket of all consumption goods
C. PCE price index excluding food and energy; is less volatile
D. GDP price index; includes all goods and services bought by Americans
B The PCE is based on the current consumption bundle and thereby avoids the biases in the CPI.
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Suppose that Country A and Country B each had the same per capita real Gross Domestic Product (GDP) of $10,000 in 2008
Country A's per capital real Gross Domestic Product (GDP) had a growth rate of 3 percent per year and Country B's per capital real Gross Domestic Product (GDP) had a growth rate of 4 percent per year. By 2013, the per-capita real Gross Domestic Product (GDP) for the two countries, respectively, were A) $10,300 and $10,400. B) $11,593 and $12,167. C) $14,000 and $16,000. D) $11,941 and $12,653.
The components of aggregate expenditure that change when real GDP changes are known as
A) unplanned expenditure. B) induced expenditure. C) autonomous expenditure. D) changeable expenditure. E) planned expenditure.