Victor works as a manager of a clothing store. He is paid an annual salary of $55,000. As part of his employee benefits, he receives private health insurance and his company contributes a small amount each month to a pension plan in his name. The company also pays taxes for Social Security and unemployment insurance. When considering the compensation of employees category of the income approach to GDP, which of the following lists includes the correct components of Victor's compensation?
A. salary and pension plan contribution only
B. salary, health insurance, and pension plan contribution only
C. Social Security taxes and unemployment insurance taxes only
D. salary, health insurance, pension plan contribution, Social Security taxes, unemployment insurance taxes
Answer: D
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I. The real interest rate is the opportunity cost of borrowed funds. II. The real interest rate equals the nominal interest rate adjusted for inflation. A) I B) II C) both I and II D) neither I nor II
Inferior goods have an income elasticity of demand that is
a. positive b. negative c. 0 d. greater than 1 in absolute value e. equal to 1 in absolute value
Output per worker is defined as
a. resource productivity b. the output-worker ratio c. labor productivity d. worker's GDP e. productive consumption
The current yield of a bond:
A. is another term for the yield to maturity. B. is the difference between its future value and its present value. C. equals zero for a zero-coupon bond since these bonds have no coupon payments. D. is another term for the coupon rate.