Which of the following is true about the consumer price index?
A) It is updated continuously to account for the introduction of new goods.
B) It accounts for people switching away from goods whose prices have risen.
C) It assumes that consumers purchase the same quantity of each product in the market basket each month.
D) It accurately reflects quality changes in goods and services over time.
C
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The life-cycle hypothesis predicts there to be a rather ________ short-run multiplier and thus a rather ________ private economy
A) low, unstable B) low, stable C) high, unstable D) high, stable
Suppose a firm overpays its workers at the start of the job, and then the firm slowly lowers wages over time until eventually the firm pays the workers considerably less than the worker's marginal product of labor. What prevents this "reverse of a delayed-compensation scheme" from being implemented?
A. The firm would need to enforce a mandatory retirement age, which is illegal in the United States. B. Workers would leave the job as soon as the firm tried to pay the worker less than his or her value of marginal product. C. Workers prefer wages to increase over time. D. The workers would never have an incentive to invest in general training. E. The firm would fire the worker as soon as the worker's value of marginal product exceeded the worker's wage.