Exhibit 13-1 Consumer Price Index
Year
ConsumerPrice Index
1
100
2
110
3
115
4
120
5
125
As shown in Exhibit 13-1, the rate of inflation for Year 5 is:

Which of the following is true about the Federal Reserve and its ability to prevent recessions? The Federal Reserve

A) can fine tune the economy and realistically hope to keep the economy from experiencing recessions. B) cannot realistically fine tune the economy and has little to no effect on the magnitude and length of recessions. C) cannot realistically fine tune the economy, but seeks to keep recessions shorter and milder than they would otherwise be. D) does not try to eliminate recessions, but instead focuses on preventing inflation.

The possibility of a free rider exists:

a. in the presence of external costs and benefits. b. only in the presence of external costs. c. only in the presence of external benefits. d. only in the presence of internal costs. e. only in the presence of a government-produced good.