The GDP deflator is a broader measure of the price level than the CPI because
A) it covers sales tax.
B) it covers rents.
C) it covers investment.
D) it factors out fluctuations in seasonal items.
Question 2
By rescuing large, troubled institutions, as happened during the 2007-2009 financial crisis and recession with institutions like AIG and General Motors, policymakers attempted to achieve financial and economic stability in the short run, but their
actions may encourage even riskier behavior on the part of these large institutions in the future if these institutions believe that they, too, will be bailed out if they get in trouble. This risk faced by policymakers is known as A) asymmetric information.
B) quantitative easing.
C) too-big-to-fail policy.
D) moral hazard.
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