To compare the purchasing power of nominal wages in two different years, one must:
A. deflate both quantities by a common price index.
B. adjust both quantities by the real interest rate.
C. increase both quantities by the same percentage increase in a price index.
D. compare the nominal values.
Answer: A
You might also like to view...
Which of the following examples would result in a decreased product price?
a. The supply for video games remains constant, but the demand increases. b. The demand for DVD players decreases, but the supply decreases more. c. The supply for Geiger counters increases, but the demand increases more. d. The demand for remote control drones increases, but the supply increases more.
The functions of money are to serve as a:
Determinant of consumption, investment, and government spending Resource allocator, method for accounting, and means of income distribution Factor of production, exchange, and aggregate supply Unit of account, store of value, and medium of exchange
Why does an economy need a rationing mechanism?
A. because it preserves the power of the wealthy B. because it eliminates poverty C. because of scarcity D. All of these are correct.
If households and firms decide to hold less of their money in checking account deposits and more in currency, then initially, the money supply
A) will decrease. B) will not change. C) will increase. D) may increase or decrease.