Answer the following statements true (T) or false (F)
1. If you received a 4% increase in your nominal wage and the price level increased by 6%, then your real wage has increased by 2%.
2. Nominal wage measures the purchasing power of a given amount of real wage.
3. One reason for the high wage rates in the United States and other advanced economies is the high productivity of labor in these countries.
4. In a purely competitive labor market, a profit-maximizing firm will hire labor up to the point where the marginal resource cost equals the wage rate.
1. FALSE
2. FALSE
3. TRUE
4. FALSE
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Keynesians tend to believe that
A. laissez-faire policies stabilize market economies. B. recessions are temporary. C. expansionary government spending and tax cuts are cures for recessions and depressions. D. in the short run, aggregate supply should be manipulated to stabilize the economy.
Amy spends $5,000 on remodeling a storefront that she then opens as a take-out deli. Business has not been very successful, and she needs an additional $1,000 to keep the deli open. Which of the following is true?
A. The $5,000 Amy spent on remodeling represents a part of the total variable cost of her business. B. The $1,000 Amy needs to keep the deli open represents her total fixed costs. C. The $1,000 represents her marginal costs of production. D. The $5,000 Amy spent is a fixed cost of her business.
Since the U.S. economy expanded rapidly from 1992 to 2000, it must be true that
A. fiscal contraction overwhelmed monetary expansion. B. monetary expansion overwhelmed fiscal contraction. C. monetary expansion exactly offset fiscal contraction. D. monetary contraction overwhelmed fiscal expansion.
John just graduated law school and has two competing job offers. The first is in Phoenix and pays a salary of $150,000 . He has a similar job offer in Cleveland that pays $90,000 . Which pair of CPIs would make the two salaries have the same purchasing power?
a. 70 in Phoenix and 42 in Cleveland b. 68 in Phoenix and 34 in Cleveland c. 42 in Phoenix and 70 in Cleveland d. 34 in Phoenix and 68 in Cleveland