Because all workers should be able to earn a living wage, the minimum wage should be raised to $11.50 per hour in the United States. This statement is best described as
A. a normative statement.
B. a marginal statement.
C. an implication of an efficient market.
D. a positive statement.
Answer: A
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Other things being constant, if the U.S. real rate of interest exceeds that of its trading partners, we expect
A) political instability in the United States. B) a worsening of the U.S. balance of payments. C) an appreciation of U.S. currency. D) that a "dirty float" will emerge.
According to the theory of adaptive expectations, if the inflation rate has been 4.2 percent for the last ten years, people will expect next year's inflation rate to be:
a. 4.2 percent. b. higher than 4.2 percent. c. lower than 4.2 percent. d. 0; that is, they will expect no inflation. e. 8.4 percent.
The present discounted value of $60,000 to be received at the end of three years when the interest rate is 10 percent is closest to
A. $79,860. B. $49,587. C. $45,079. D. $60,000.
The Federal Reserve plays a larger role than Congress and the president in stabilizing the economy because
A) the Federal Reserve can more quickly change monetary policy than the president and the Congress can change fiscal policy. B) the Federal Reserve can immediately recognize when real GDP is below or above potential GDP. C) changes in interest rates have a considerably larger effect on the economy than changes in government purchases or taxes. D) changes in interest rates have their full effect on the economy in a short period of time, whereas changes in government spending and taxes have their full effect over a long period of time.