I the Concept of Real Income Is Sometimes Called Deflated

question 51

Multiple Choice

i. The concept of real income is sometimes called deflated income or income expressed in constant
Dollars and the CPI is called the deflator.
ii. To deflate sales, the actual sales are multiplied by the wholesale price index and the result
Multiplied by 100.
iii. The CPI serves only one major function: as an economic indicator of the rate of inflation.

• A) (i) is a correct statement, but (ii) and (iii) are incorrect statements.
• B) (i) and (ii) are correct statements but not (iii).
• C) (i) and (iii) are correct statements but not (ii).
• D) (ii) and (iii) are correct statements but not (i).
• E) (i), (ii), and (iii) are all false statements.

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Definitions:

Money Supply

The complete aggregate of monetary assets in an economy at a certain moment.

Natural Rate of Unemployment

The level of unemployment consistent with a stable rate of inflation, determined by the structure and dynamics of the labor market.

Phillips Curve

An economic theory suggesting an inverse relationship between the level of unemployment and the rate of inflation within an economy.

Unemployment

The state of being jobless and actively seeking employment.