The substitution bias is believed to cause the consumer price index to:
a. overstate the true rate of inflation.
b. understate the true rate of inflation.
c. understate the true GDP deflator.
d. none of these.
a
Economics
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Figure 7-5
Which of the graphs in Figure 7-5 could be a firm's total fixed cost curve?
a.
(a)
b.
(b)
c.
(c)
d.
(d)
Economics
The drawback to calculating real GDP using base-year prices is that
A) real GDP in one year is not comparable to real GDP in another year. B) relative prices change over time and these are not reflected in base-year prices, and this distorts GDP. C) relative prices change over time and these changes are reflected in base-year prices. D) quality changes are reflected in base-year prices.
Economics