If prices rise by 4% in a year and nominal wages increase by only 2%, then real wages will
A. increase by 2%.
B. decrease by 4%.
C. decrease by 2%.
D. decrease by 6%.
Answer: C
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Which of the following is NOT a characteristic of a perfectly competitive industry?
A) There are many firms. B) There are no restrictions on entry into the market. C) Each firm produces a slightly differentiated product. D) Each firm takes price as given, determined by the equilibrium of industry supply and industry demand.
The Laffer Curve demonstrates that _____
a. at some level of tax rates, tax revenues decline b. there is no relationship between tax rates and tax revenue c. there is no relationship between tax rates and labor supply d. at some level of tax rates, labor supply declines
Suppose that the economy is operating in full-employment equilibrium along the vertical section of the aggregate supply curve. If the aggregate demand curve is reduced by $100 billion in order for the price level to decline by 5 percent, and if the marginal propensity to consume (MPC) is 0.75, then what change in taxes would generate the desired price reduction?
a. $300 billion. b. -$75 billion. c. -$33.3 billion. d. -$25 billion.
If the MPC is 0.95 and the MPM is 0.05, the open economy multiplier is 10.
Answer the following statement true (T) or false (F)