Which of the following people is least likely to be hurt by inflation?
a. A salesperson who works on commission
b. A retired couple living on a pension
c. An individual who enters into a fixed-wage contract for the next three years
d. An individual who agrees to lend money at a fixed rate of interest for the next three years
e. An individual working at the minimum wage which seldom changes
a
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According to the production function, as the quantity of labor employed increases, real GDP increases
A) at an increasing rate. B) at a decreasing rate. C) at a constant rate. D) and then eventually decreases. E) until it reaches potential GDP, and then it no longer changes.
Which of the following is an example of a bank realizing economies of scope?
A) The bank develops a standard mortgage loan application to make the process of loaning out mortgages easier. B) The bank reduces costs of credit checking for the loan process by outsourcing the process to a specialist. C) By using the information collected from a corporation, the bank can decide how easy it would be to sell bonds issued by the corporation to the public. D) A bank in a rural area specializes in providing agricultural loans.
The Consumer Price Index (CPI) differs from a chain-weighted price index in that the CPI:
A. requires calculation of GDP, while the chain-weighted index does not. B. measures the costs of a typical fixed basket of goods over time, while the chain-weighted index does not. C. allows for the goods consumed in an economy to change over time, while the chain-weighted index does not. D. compares the prices of all goods in one year to the prices of all goods in other years.
Answer the following statements true (T) or false (F)
1. Majority voting produces efficient outcomes because it takes into account the strength of the preferences of individual voters. 2. Majority voting on whether or not a public good should be produced could lead to a result where a public good whose costs are bigger than the benefits would end up getting approved by the voters. 3. If a public good provides social benefits that are greater than its costs, then majority of voters would always vote in favor of producing the good. 4. Special interest groups result from people with strong preferences on a particular issue banding together to let policymakers know their preferences. 5. Political logrolling, or vote-trading, can turn a potentially inefficient voting outcome into an efficient one.