When the CPI increases from 200 in 2010 to 210 in 2011 and the nominal wage rate is constant at $10 an hour, the real wage rate ______
A. increases by 10 percent
B. increases to $15 an hour
C. decreases by 5 percent
D. is $10 an hour
C The nominal wage rate falls from [($10 ÷ 200) × 100], which is $5.00, to [($10 ÷ 210) × 100], which is $4.76, a fall of 5 percent.
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Mike, of Mike's Machines has hired a consultant who informs Mike that since the total revenue from current operations exceeds total cost, he should consider increasing production of machines. Mike would be best off if he
a. increases production of machines until total revenue is equal to total cost. b. increases production until net gains are equal to zero. c. maintains his current level of production so long as marginal revenue is equal to marginal cost. d. decreases his current level of production if marginal revenue is equal to marginal cost.
Suppose firms A and B each make T-shirts. Firm A's production function is q = L0.5 K0.5. Firm B's production function is q = 1.2 ? L0.5 K0.5
If the two firms each hire the same amounts of capital and labor, compare the two firms in terms of APL and MPL.
If, under a fixed exchange rate system, the dollar price of Mexican pesos is below its equilibrium level, then the
A) dollar is undervalued. B) peso is undervalued. C) dollar has depreciated. D) peso has appreciated. E) a and c
In the short run, the Federal Reserve faces a tradeoff between
What will be an ideal response?