In which of the following situations would a person be best off in real terms?
a. Receiving a 10 percent increase in a nominal wage, with an 8 percent rate of inflation in the economy
b. Receiving a 3 percent increase in a nominal wage, with a 0 percent rate of inflation in the economy
c. Receiving a 4 percent increase in a nominal wage, with a 5 percent rate of inflation in the economy
d. Receiving no increase in a nominal wage, with a 5 percent rate of deflation in the economy
e. Receiving a 2 percent decrease in a nominal wage, with a 6 percent rate of deflation in the economy
D
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Which of the following is an example of money functioning as a unit of account?
A) Bank of America charging 7 percent on an auto loan. B) Pepsi charging $1 for a can of soda. C) eBay using PayPal as a method of payment. D) Your writing a check at Target to pay for new clothes.
The production possibilities curve demonstrates the basic economic principle that
a. economies are always efficient b. assuming full employment, supply will always determine demand c. assuming full employment, an economy is efficient only when the production of capital goods in a particular year is greater than the production of consumption goodsin that year d. assuming full employment, to produce more of any one thing, the economy must produce less of at least one other good e. the production of more consumption goods this year requires the production of morecapital goods this year
If trade between two countries is voluntary, one can expect that
A. one country’s gain is necessarily the other’s loss. B. one country will exploit the other one. C. neither country really gains from trade. D. the larger country will always gain at the expense of the smaller. E. both countries expect to gain something.
Suppose there are two parallel highways between two cities with approximately equal traffic. What would you expect to happen if the state began charging tolls to drive on one of those highways?
A. More drivers would drive on the toll road making the non-toll road less congested. B. Traffic would remain evenly divided between the two roads as drivers continuously sought the less-congested route. C. More drivers would drive on the non-toll road, making the toll road less congested. D. Traffic would decrease on both roads.