A Price Index Can Fall from One Year to the Next

question 13

Multiple Choice

A price index can fall from one year to the next:

• A)​even when nominal GDP falls.
• B)​even when real GDP falls.
• C)​even when some individual good's prices rise.
• D)​in any of the above circumstances.

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Definitions:

Deadweight Loss

A reduction in economic effectiveness that happens when a good or service does not reach or cannot reach equilibrium.

Monopolist

A single seller in a market who has significant control over the price and supply of a product.

Marginal Cost

The variation in the overall expense that occurs as a result of increasing the production quantity by one unit.

Consumer Surplus

The benefit consumers receive when they pay less for a product than what they were prepared to pay, measured by the area beneath the demand curve and above the price.