The consumer price index is calculated by

A. calculating the change in quantity over time of a basket of goods

B. None of the above

C. calculating the change in price and quantity over time of a basket of goods

D. calculating the change in price over time of a fixed quantity of goods

One of the major difficulties in calculating the Consumer price indexover a long time frame is that

A. there are different amounts of goods bought from year to year

B. the price of goods bought changes over time

C. None of the above

D. the quality of goods bought changes over time

Assume people on average save 40% of every additional dollar in income that they receive, and there are no taxes, exports, or imports.

Based on the fiscal multiplier, approximately what will happen to aggregate demand if there is a $2 billion increase in taxes aimed at the wealthy over several years?

A. Real GDP will decrease by $2 billion

B. Real GDP will increase by $3 billion

C. Real GDP will increase by $5 billion

D. Real GDP will decrease by $3 billion

E. Real GDP will decrease by $5 billion

If the effect of taxes and imports were added to the basic fiscal multiplier (1/MPS), the multiplier would

A. decrease

B. be unaffected

C. increase

In the Prisoner of War camp economy, how could prisoners substantially increase the amount of trade?

A. monetary contraction which shifted AD to the right

B. fiscal stimulus which shifted AD to the right

C. fiscal stimulus which shifted AS to the right

D. monetary expansion which shifted AD to the right

E. None of the above

In the Baby Sitter economy, the recession was caused by a_______ shock, and ________ be fixed by an economic stimulus.

A. short run aggregate supply; could not

B. aggregate demand; could

C. aggregate demand; could not

D. short run aggregate supply; could

E. long run aggregate supply; could not

From the following symptom, given a recession is going on, what kind of shock is likely to have caused it given....

an increase in inflation

A. Aggregate supply

B. Aggregate demand

C. Neither

From the following symptom, given a recession is going on, what kind of shock is likely to have caused it given....

surveys show weak "consumer confidence"

A. Aggregate supply

B. Aggregate demand

C. None of the above