Multiple Choice
Which of the following statements is true concerning the consequences of rent controls?
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5. Consumer and Producer Surplus; Price Ceilings and Floors
Price Ceilings, Price Floors, and Black Markets
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Which one of the following is NOT a measure of the price level?
A
Gross Domestic Product (GDP) Deflator
B
Producer Price Index (PPI)
C
Minimum Wage
D
Consumer Price Index (CPI)
Verified step by step guidance1
Step 1: Understand what a 'price level' measure is. A price level measure is an index or indicator that reflects the average prices of goods and services in an economy over time, helping to track inflation or deflation.
Step 2: Identify the common price level measures listed: GDP Deflator, Producer Price Index (PPI), and Consumer Price Index (CPI). Each of these indexes tracks prices but in different contexts—GDP Deflator covers all domestically produced goods and services, PPI tracks prices from the producer's perspective, and CPI measures prices from the consumer's perspective.
Step 3: Recognize that 'Minimum Wage' is not a price level measure. Instead, it is a legally mandated lowest hourly wage that employers can pay workers, which is a labor market policy, not an index of prices.
Step 4: Conclude that among the options, Minimum Wage does not measure the price level, while GDP Deflator, PPI, and CPI do.
Step 5: Summarize that price level measures are indices reflecting average price changes, whereas Minimum Wage is a regulatory wage floor and thus not a price level measure.
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