Macroeconomics
Macroeconomics
10th Edition
ISBN: 9781319105990
Author: Mankiw, N. Gregory.
Publisher: Worth Publishers,
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Chapter 16, Problem 2PA
To determine

Explain the given argument in terms of time-inconsistency problem.

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Which of the following, if true, would illustrate why price indexes such as the CSPI might overstate inflation in the cost of going to college? Check all that apply. Professors required each student to buy 10 textbooks, regardless of the price. As the price of textbooks increased, more and more students turned to the used-book market or chose not to buy textbooks at all, instead using the copies on reserve in the library. A new, safe method of memory enhancement became available for purchase. The quality and design of calculators improved dramatically from 2017 to 2019. For example, calculators made in 2019 accept memory cards, whereas those made in 2017 do not, but this quality change is hard to measure.
Inflation is a general rise in the level of prices; however, our measures of inflation collect price information on thousands of goods, and firms set these prices. Most firms set prices as “a mark-up over costs”: P = (W/A) x (1 + z). Use this equation to explain the factors that influence inflation.
Historically, there is a correlation between the inflation rate and real economic activity (such as real GDP growth). Zero Negative Sometimes positive, sometimes negative. Positive
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