Of the alternative measures of the price level, _________ ...

[Yolanda]

Of the alternative measures of the price level, _________ overcomes the bias of the CPI and is a better measure of the cost of living because it _________.
 
  A. GDP price index; uses a current basket
  B. PCE price index; uses a current basket of all consumption goods
  C. PCE price index excluding food and energy; is less volatile
  D. GDP price index; includes all goods and services bought by Americans

Question 2

Suppose your expenses for this term are as follows: tuition: 12,000, room and board: 6,500, books and other educational supplies: 1,500.
 
  Further, during the term, you can only work part-time and earn 3,500 instead of your full-time salary of 14,000. What is the opportunity cost of going to college this term, assuming that your room and board expenses would be the same even if you did not go to college?
  A) 13,500 B) 20,000 C) 24,000 D) 30,500

[akpaschal]

Answer to Question 1

B The PCE is based on the current consumption bundle and thereby avoids the biases in the CPI.

Answer to Question 2

C

[Yolanda]

Great answer, keep it coming

[Alyson.hiatt@yahoo.com]

Excellent