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6. The index can be used to measure an overall inflation rate of an economy. (a. True b. False) 7. The official inflation rat
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Answer #1

6. Ans: True

Explanation:

The Consumer Price Index (CPI) measures the average change in prices of a basket of goods and services over time. CPI is a tool to measure an overall inflation rate of an economy. Thus, the statement is true.

7. Ans: True

8. Ans: False

Explanation:

Public savings = National savings - Private savings. Thus, the statement is false.

9. Ans: True

10. False

Explanation:

Supply of loanable funds comes from savings and demand for loanable funds comes from domestic investment. Thus, the statement is false.

11. Ans: True

Explanation:

When budget deficit cowds out private investment, employment and output decreases. This leads to decrease in GDP. Thus, the statement is true.

12. Ans: Government transfers.

Explanation:

GDP = Consumption + Investments + Government purchases + Net exports.

Thus, option [c] is correct answer..

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