Which of the following is true about the consumer price index (CPI) and the GDP price index?
a. Both measures weigh prices by quantities consumed in some base year
b. Both yield identical numbers for price level changes for any two years.
c. Both CPI and GDP price index underestimate changes in the price level in an economy.
d. The CPI measures changes in relative prices of goods, while the GDP price index measures changes in the absolute price level of a fixed basket of goods and services.
e. CPI includes products that are widely used, while GDP price index includes all goods and services.
e
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If the quantity demanded exceeds the quantity supplied, then there is
A) a shortage and the price is below the equilibrium price. B) a shortage and the price is above the equilibrium price. C) a surplus and the price is below the equilibrium price. D) a surplus and the price is above the equilibrium price.
Suppose that data for a particular economy over time suggest that its aggregate demand curve is both steep and shifts frequently. We might reasonably infer that ________
A) the central bank has an activist emphasis on the stability of economic activity B) wages and prices are remarkably flexible C) policy lags are quite long D) all of the above E) none of the above