If the Consumer Price Index (CPI) in Year X Was

question 55

Multiple Choice

If the consumer price index (CPI) in Year X was 300 and the CPI in Year Y was 325, the rate of inflation for Year Y was:

• A) 325 percent.
• B) 25 percent.
• C) 5 percent.
• D) 8 percent.

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Definitions:

Coase Theorem

A theory suggesting that if trade in an externality is possible and there are no transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of property.

Coase Theorem

A legal and economic theory stating that if trade in an externality is possible and there are no transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of property rights.

Transaction Costs

The expenses incurred when buying or selling a good or service, which can include search, bargaining, and enforcement costs.

Marginal Social Benefit

The additional benefit to society resulting from one more unit of a good or service being produced and consumed.