When the government cuts the income tax rate, the real wage rate paid by employers ________ and the real wage rate received by workers ________ and potential GDP ________
A) increases; increases; increases
B) decreases; decreases; increases
C) increases; decreases; increases
D) decreases; increases; decreases
E) decreases; increases; increases
E
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The Citizens First Bank sells $100,000 of government securities to the Fed. This sale immediately
A) decreases the quantity of money. B) decreases the bank's assets. C) increases the bank's required reserves. D) decreases the bank's checkable deposits. E) increases the bank's reserves.
If the nominal interest rate is 10% and expected inflation is 5%, the real expected interest rate is
A) 15%. B) -5%. C) 5%. D) 10%.
Which of the following formulas would correctly calculate a monopolist's profit?
a. profit = price – marginal cost b. profit = price – average total cost c. profit = (price – marginal cost) × quantity d. profit = (price – average total cost) × quantity
Cashews and asparagus are normal goods. When the price of asparagus falls, the substitution effect by itself causes
a. the consumer to feel richer, so the consumer buys more cashews. b. the consumer to feel richer, so the consumer buys less cashews. c. cashews to be relatively more expensive, so the consumer buys less cashews. d. cashews to be relatively less expensive, so the consumer buys more cashews.