If two goods are complementary,
a. a decrease in the price of one good will lead to a decrease in the demand for the other
b. the cross elasticity of demand is zero
c. an increase in the price of one good will lead to an increase in the demand for the other
d. the cross elasticity of demand is positive
e. a decrease in the price of one good will lead to an increase in the demand for the other
E
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What will be an ideal response?
The Fed uses a "core" price index, one that excludes food and energy prices to measure inflation. It does so because
A) food and energy prices have wide swings that are not related to the causes of general inflation. B) food and energy have inelastic demand curves and consumers will buy them regardless of their price. C) food and energy prices do not change all that much during the short run, so are irrelevant to the calculation of inflation. D) it wants to avoid the blame for high gasoline prices causing inflation.