One family earned an income of $28,000 in 1995. Over the next five years, their income increased by 15 percent, while the CPI increased by 12 percent. After five years, this family's nominal income ________, and their real income ________.
A. decreased; increased
B. increased; did not change
C. decreased; decreased
D. increased; increased
Answer: D
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Diminishing marginal returns to labor imply that
a. fixed costs will remain constant as the firm's output increases. b. the firm's short-run marginal cost curve will be upward sloping. c. the firm enjoys increasing returns to scale in the long run. d. the firm will be unable to earn short-run economic profit.
Jim recently graduated from college. His income increased tremendously from earning $500 . a year to $60,00 . a year. Jim decided that instead of renting he will buy a house. This implies that
a. Houses are normal goods for Jim b. Houses are inferior goods for Jim c. Renting and Owning are complementary for Jim d. Need information on the price of houses
Ricardian equivalence can be said to hold if:
a. taxation has greater effect on private spending than government borrowing. b. taxation has a lesser effect on private spending than government borrowing. c. government borrowing does not affect private consumption while taxation has a negative impact on private consumption. d. government spending activities financed by taxation and those financed by borrowing have the same effect on private spending. e. government spending activities financed by taxation and those financed by borrowing have no effect on private spending.
An example of a public policy response to a monopoly is:
A. encouraging mergers. B. public admonishment. C. antitrust laws. D. All of these are examples.