Joe's increase in wages has been identical to the increase in the price level. Joe thinks that he is better off and has increased his expenditures. Joe's behavior is consistent with
A) the classical model. B) Say's law.
C) money illusion. D) a vertical aggregate supply curve.
C
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Fill in the blank: a combination of two goods that lies beyond the production possibilities frontier ________
A) can be produced with the current set of resources B) cannot be produced with the current set of resources C) can never be produced with any set of resources D) can be produced but only if the producer becomes more greedy
Aggregate demand is the relationship between the quantity of real GDP demanded and the ________
A) price level B) money wage rate C) real wage rate D) nominal GDP demanded
Mel is thinking of going on a cruise. Mel values a cruise in nice weather at $2,000 and values a cruise in bad weather at $50. The probability of nice weather is 60 percent and the probability of bad weather is 40 percent. Trip insurance is sometimes available. If purchased, it allows travelers to delay the cruise until the weather is nice. If Mel is risk-neutral, then in the absence of trip insurance, the most she will be willing to pay for the cruise is:
A. $1,200. B. $1,000. C. $1,220. D. $1,250.
The top policy goal for Paul Volcker when he became chairman of the Federal Reserve's Board of Governors in 1979 was
A) fighting inflation. B) increasing employment. C) increasing economic growth. D) increasing regulation of commercial banks. E) a low current account deficit.