Question

47)Headline inflation:

Multiple Choice

a)measures price changes with food and energy costs taken out of the basket.

b)is inflation measured using the retail price index.

c)is inflation measured using the producer price index

d) measures the changes in prices for the entire market basket of the average urban consumer.

48)With respect to social security benefits, which of the following statements is true?

Multiple Choice

a)If CPI is understated, then the U.S. government loses and social security recipients gain.

b)If CPI is understated, then the U.S. government gains and social security recipients lose.

c)If CPI is understated, then both the U.S. government and social security recipients lose.

d)If CPI is understated, then both the U.S. government and social security recipients gain.

50)Why is GDP not the best measurement of economic well-being for any country? Because it                     

Multiple Choice

a)does not take account the size of population nor the inflation rate.

b)takes account the rate of inflation.

c)takes account the size of population but not the inflation rate.

d)takes account the size of population as well as the inflation rate.

52)Which of the following explanations argues that workers already employed, if they have enough power and more clout, will prevent firms from hiring unemployed workers at a lower real wage?

Multiple Choice

a)the job search explanation

b)the efficiency wage explanation

c)the insiders versus outsiders argument

d)the minimum wage laws

Answer 1

47) d is correct

Headline inflation measures changes in prices of all the goods and services including the prices of food and energy.

48) b is correct

Social security benefits are based on consumer price index. If CPI is understated, governement has to pay less and real value of the benefits is lower to recipients.

50) a is correct

GDP does not take into population rate and inflation rate.

52) c is correct

Insiders or those who are already employed have the bargaining power due to high turnover cost to prevent the firms from hiring outside workers.