If you have $1,000 in wealth and the price level increases by 20 percent, then
A) the $1,000 will buy fewer goods and services.
B) the $1,000 dollars will buy 20 percent more goods and services.
C) the real value of the $1,000 increases.
D) you will be able to buy fewer goods, but the real value of those goods will increase.
A
You might also like to view...
An open market sale of T-bonds by the Fed causes the money supply to
a. fall and bond prices to fall. b. rise and bond prices to fall. c. rise and bond prices to rise. d. fall and bond prices to rise.
Consider a color-blind firm that is currently maximizing profits. An affirmative action policy is put in place requiring that all firms in the industry abide by a certain quota. Which of the following will occur?
A. The firm will have to fire some workers. B. If the firm currently meets the required quota, it will cut costs by adjusting labor to exactly meet the affirmative action requirements. C. The firm will have to start hiring some workers that it would prefer not to. D. If the firm currently meets the quota, it will begin to lose profits due to the affirmative action requirements. E. If the quota is already met, the firm will make no changes in its hiring practices.
Which of the following terms is used to describe an exchange rate regime in which the rate is fixed to a currency or basket of currencies?
A. Exchange controls B. Managed float C. Pegged exchange rate D. Fully convertible
Ellen's Painting Services is a perfectly competitive firm that currently paints 10 houses a month and charges $100 per house, which is the going market price
Ellen's marginal cost is positively related with the quantity of service she provides and is currently $120. What should Ellen do to increase her economic profit? Paint more houses? Raise her price? Explain your answer.